PAPAGO PARK CENTER
                                 GROUND SUBLEASE




                                     BETWEEN



                            PAPAGO PARK CENTER, INC.

                             an Arizona corporation



                                       AND




                            THREE-FIVE SYSTEMS, INC.

                             a Delaware Corporation







                               DATED April 1, 1994
<PAGE>
                                TABLE OF CONTENTS

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                                                                          ----



ARTICLE 1 DEFINITIONS......................................................  1
         Section 1.1. Definitions..........................................  1

ARTICLE 2 DEMISE OF THE PREMISES; TERM.....................................  5
         Section 2.1. Premises.............................................  5
         Section 2.2. Term.................................................  5
         Section 2.3. Commencement Date; Possession........................  5
         Section 2.4. Title Insurance......................................  5
         Section 2.5. Nondisturbance and Attornment Agreement..............  6

ARTICLE 3 RENT.............................................................  6
         Section 3.1. Rent.................................................  6
         Section 3.2. Rent Absolutely Net..................................  9
         Section 3.3. Option to Purchase................................... 10
         Section 3.4. Nonsubordination..................................... 12

ARTICLE 4 ADDITIONAL RENT.................................................. 13
         Section 4.1. "Additional Rent" and "Impositions" Defined.......... 13
         Section 4.2. Payments............................................. 14
         Section 4.3. Contest.............................................. 14
         Section 4.4. Assessment Reduction................................. 14
         Section 4.5. Hold Harmless........................................ 14

ARTICLE 5 INSURANCE........................................................ 15
         Section 5.1. Tenant Obligations to Insure......................... 15
         Section 5.2. Policies and Companies............................... 16
         Section 5.3. Policy Delivery, Payment Evidence.................... 16
         Section 5.4. Blanket Insurance.................................... 16
         Section 5.5. Expiration of Term................................... 16
         Section 5.6. Risk of Loss......................................... 17
         Section 5.7. Failure to Maintain Insurance........................ 17
         Section 5.8. Availability of Insurance............................ 17

ARTICLE 6 SURRENDER........................................................ 17
         Section 6.1. Surrender--Removable Property........................ 17
         Section 6.2. Waste................................................ 18
         Section 6.3. Title................................................ 18
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         Section 6.4. Initial Environmental Site Assessment................ 18
         Section 6.5. Interim Site Assessments............................. 18
         Section 6.6. Final Phase I........................................ 19
         Section 6.7. Tenant's Failure to Obtain the Final Phase I......... 19
         Section 6.8. Survival of Provisions............................... 19

ARTICLE 7 LANDLORD'S PERFORMANCE FOR TENANT................................ 20
         Section 7.1. Cures--Rights, Costs, and Damages.................... 20

ARTICLE 8 USE AND MAINTENANCE OF PREMISES.................................. 20
         Section 8.1. Absence of Warranties................................ 20
         Section 8.2. Permitted Uses....................................... 21
         Section 8.3. Maintenance and Repairs.............................. 21
         Section 8.4. Performance by Landlord.............................. 21
         Section 8.5. Alterations.......................................... 21

ARTICLE 9 COMPLIANCE....................................................... 22
         Section 9.1. Tenant Obligations................................... 22
         Section 9.2. Certificate of Occupancy............................. 22

ARTICLE 10 CONSTRUCTION OF BUILDINGS AND LANDSCAPING....................... 22
         Section 10.1. General Requirements................................ 22
         Section 10.2. Approval of Final Plans............................. 23
         Section 10.3. Government Approval................................. 23
         Section 10.4. Construction Standards.............................. 23
         Section 10.5. Ownership of Buildings and Improvements............. 23
         Section 10.6. Requirement of Construction Contract................ 24
         Section 10.7. Application of This Article......................... 25

ARTICLE 11 IMPAIRMENT OF LANDLORD'S TITLE.................................. 25
         Section 11.1. No Liens............................................ 25
         Section 11.2. Discharge........................................... 25
         Section 11.3. No Implied Consent.................................. 26

ARTICLE 12 INSPECTION...................................................... 26
         Section 12.1. Inspection and Entry................................ 26

ARTICLE 13 INDEMNIFICATION................................................. 27
                                       ii
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                                TABLE OF CONTENTS
                                   (Continued)
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         Section 13.1. Indemnification of Landlord......................... 27
         Section 13.2. Indemnification of Tenant........................... 29

ARTICLE 14 DAMAGE OR DESTRUCTION........................................... 30
         Section 14.1. Tenant's Election to Restore, Rebuild or Raze....... 30
         Section 14.2. Lease Obligations Continue.......................... 30
         Section 14.3. Election to Terminate............................... 30

ARTICLE 15 CONDEMNATION.................................................... 31
         Section 15.1. Total or Substantial Takings........................ 31
         Section 15.2. Partial Taking...................................... 32
         Section 15.3. Rights of Participation............................. 32
         Section 15.4. Notice of Proceeding................................ 32

ARTICLE 16 SUBTENANT NON-DISTURBANCE....................................... 33
         Section 16.1. Agreement for Non-Disturbance of Subtenants......... 33

ARTICLE 17 ASSIGNMENT, SUBLETTING, MORTGAGE................................ 34
         Section 17.1.  Prior Consent; Permitted Assignments............... 34
         Section 17.2.  Permitted Subleases................................ 35
         Section 17.3.  Rent From Assignee................................. 36
         Section 17.4.  Continuing Liability............................... 36
         Section 17.5.  Assignee Bound..................................... 37
         Section 17.6.  Consent Limited.................................... 37
         Section 17.7.  Permitted Mortgages--Definition.................... 37
         Section 17.8.  Permitted Mortgages--Further Provisions............ 38
         Section 17.9.  Notice to Permitted Mortgagees..................... 39
         Section 17.10. Right to Cure...................................... 39
         Section 17.11. Conditions of Cure................................. 40
         Section 17.12. New Lease with Mortgagee........................... 40
         Section 17.13. Priority of New Lease.............................. 41
         Section 17.14. Assignment of Subleases............................ 41
         Section 17.15. Grace Period....................................... 41
         Section 17.16. Modifications...................................... 41
         Section 17.17. Initial Assignment................................. 42

ARTICLE 18 DEFAULT BY TENANT............................................... 42
         Section 18.1.  Events of Default.................................. 42
                                       iii
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         Section 18.2. Notice and Termination.............................. 43
         Section 18.3. No Implied Waivers.................................. 43
         Section 18.4. Remedies Cumulative................................. 43
         Section 18.5. Late Charge......................................... 43

ARTICLE 19 SAVING PROVISION................................................ 44

ARTICLE 20 NOTICES......................................................... 44
         Section 20.1. Notices............................................. 44
         Section 20.2. Notice to Permitted Mortgagees of Record Only....... 45

ARTICLE 21 QUIET ENJOYMENT................................................. 45
         Section 21.1. Quiet Enjoyment..................................... 45

ARTICLE 22 ESTOPPEL........................................................ 45
         Section 22.1. Estoppel Certificates............................... 45

ARTICLE 23 CONSENTS........................................................ 46
         Section 23.1. Parties and Notice.................................. 46
         Section 23.2. No Unreasonable Withholding or Delay................ 46

ARTICLE 24 ADJOINING EXCAVATION............................................ 46
         Section 24.1. Entry and Repairs................................... 46

ARTICLE 25 LIMITATION ON RECOURSE.......................................... 47

ARTICLE 26 EASEMENTS, DEDICATIONS AND OTHER MATTERS........................ 47

ARTICLE 27 TRADE FIXTURES, MACHINERY AND EQUIPMENT......................... 48

ARTICLE 28 LEASEHOLD MORTGAGEE FURTHER ASSURANCES.......................... 48

ARTICLE 29 MISCELLANEOUS................................................... 49
         Section 29.1. Choice of Law....................................... 49
         Section 29.2. Memorandum.......................................... 49
         Section 29.3. Entire Agreement.................................... 49
         Section 29.4. Captions............................................ 49
         Section 29.5. Execution and Delivery.............................. 50
                                       iv
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                                   (Continued)
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         Section 29.6. Singular and Plural, Gender......................... 50
         Section 29.7. Multiple Parties.................................... 50
         Section 29.8. Construction........................................ 50
         Section 29.9. Declaration......................................... 50
         Section 29.10.Nondisturbance - Improvement District.............. 50

ARTICLE 30 INUREMENT....................................................... 51
         Section 30.1. Covenants Bind and Inure............................ 51

ARTICLE 31 ATTORNEYS' FEES................................................. 52
         Section 31.1. Prevailing Party to Recover Attorneys' Fees......... 52
                                        v
<PAGE>
                               PAPAGO PARK CENTER
                                 GROUND SUBLEASE
                                 ---------------


         THIS SUBLEASE  ("Lease"),  dated  effective as of the 1st day of April,
1994,  by  and  between  PAPAGO  PARK  CENTER,   INC.,  an  Arizona  corporation
(hereinafter  "Landlord"),  and THREE-FIVE SYSTEMS,  INC. a Delaware corporation
(hereinafter "Tenant").

                                   WITNESSETH:

         WHEREAS, Landlord is the ground lessee of certain real property located
in the City of Tempe, Arizona, known as the "Papago Park Center"; and

         WHEREAS,  Landlord plans to develop and maintain the Papago Park Center
as an integrated  real estate  development  project for the benefit of Landlord;
and

         WHEREAS,  Tenant desires to lease from Landlord and Landlord is willing
to lease to Tenant a portion of the Papago  Park Center on the terms and subject
to the conditions hereinafter set forth.

         NOW,  THEREFORE,  in  consideration of these premises and of the mutual
covenants and agreements  hereinafter set forth, Landlord and Tenant have agreed
and hereby agree as follows:


                                    ARTICLE 1
                                    ---------

                                   DEFINITIONS
                                   -----------

         Section 1.1. Definitions. For the purposes of this Lease, the following
words shall have the meanings hereafter set forth:

                  "Additional Rent":  As defined in Section 4.1.

                  "Adjustment Date":  As defined in Section 3.1.B.

                  "Buildings":  Any and all  structures  or  improvements  to be
constructed  pursuant to Article 10, together with all future additions  thereto
and alterations thereof, other than Landscaping.

                  "City":  The City of Tempe, a municipal corporation.
<PAGE>
                  "City Lease": That certain so-called  "Improvements  Lease" to
be executed between the City and Tenant pursuant to that certain  "Agreement for
the  Conveyance  and  Leaseback  of  Improvements",  regarding  the lease of the
Buildings and Landscaping from the City to Tenant.

                  "Commencement Date":  As defined in Section 2.3.

                  "Declaration": Any instrument affecting the Papago Park Center
or any portion thereof which is now or may hereafter be duly recorded within the
records of Maricopa County,  Arizona,  together with all amendments thereto, and
which contains conditions, covenants,  restrictions, liens, easements or similar
provisions  running  with the land,  including  without  limitation  any  rules,
regulations, Papago Park Center Design Guidelines, Architectural and Development
Guidelines  and  procedures  for  obtaining  approvals  or  for  other  purposes
contained  therein  or  promulgated  pursuant  thereto;  provided  that any such
instrument  (including  amendments) hereafter recorded or adopted which contains
provisions  having a non-uniform  or materially  adverse affect on the Premises,
shall not be effective  against  Tenant or any Person  claiming  by,  through or
under  Tenant and shall not be  considered  a  "Declaration"  hereunder  without
Tenant's  prior written  consent,  which shall not be  unreasonably  withheld or
delayed.

                  "Environmental  Laws":  Any one or all of the  following:  the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
ss. 9601 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6941
et seq.; the Toxic Substances  Control Act, 15 U.S.C. ss. 2601 et seq.; the Safe
Drinking  Water Act, 42 U.S.C.  ss. 300h et seq.; the Clean Water Act, 33 U.S.C.
ss. 1251 et seq.;  the Clean Air Act, 42 A.R.S.  ss. 49-921 et seq.; the Arizona
Environmental  Quality Act, Laws 1986, Ch. 368; Laws 1987, Ch. 317;  A.R.S.  ss.
49-1001 et seq.; rules and regulations under any of the foregoing; and any other
applicable  laws and  regulations of the United States of America,  the State of
Arizona or any political  subdivision thereof now in effect or hereafter enacted
that deal with the  regulation or protection of the  environment,  including the
ambient air, ground water, surface water or land use.

                  "Event of Default": As defined in Section 18.1.

                  "First  Permitted  Mortgage of Record":  As defined in Section
17.8.A.

                  "Impositions":  As defined in Section 4.1.

                  "Institutional Lender":  As defined in Section 4.3.

                  "Insurance  Requirements":  All terms and  provisions  of each
insurance policy, whether procured by or covering Landlord,  City, Tenant or any
Subtenant,  covering or  applicable  to all or any part of the  Premises and all
requirements  of the issuers of any such  
                                        2
<PAGE>
policies  which are  applicable  to or affect all or any part of the Premises or
any use or condition thereof, at the time then relevant.

                  "Landlord":  Papago Park Center, Inc., an Arizona corporation,
and its successors and assigns.

                  "Landscaping":  All grading,  drainage and site preparation or
improvements,  landscaping,  planting materials, hardscaping, outdoor decorative
or beautification  features and watering systems and related  improvements to be
installed on or in the Premises by Tenant pursuant to Article 10.

                  "Lease Term":  As defined in Section 2.2.

                  "Legal  Requirements":   All  statutes,   codes,  laws,  acts,
ordinances,   orders,  judgments,  decrees,  injunctions,   rules,  regulations,
permits, licenses,  authorizations,  directions and requirements of all federal,
state,  county,  municipal,  and other  governments,  departments,  commissions,
boards,  courts,  authorities,  officials  and  officers  of  every  nature  and
description,  all terms and  conditions  of the City Lease,  and all  covenants,
conditions,  restrictions or other  requirements  duly and validly imposed by or
pursuant  to any  Declaration  (subject  to  the  limitations  contained  in the
definition  of  "Declaration")  which  may  at any  time  be  applicable  to the
Landlord,  the Tenant or any  Subtenant or to the Premises or any part  thereof,
including without limitation Environmental Laws.

                  "Lessor  under the Master  Ground  Lease":  Salt River Project
Agricultural  Improvement and Power District,  its successors and assigns,  with
respect to the Lessor's interest under the Master Ground Lease.

                  "Master Ground Lease":  That certain Papago Park Center Ground
Lease dated March 6, 1989, between Salt River Project  Agricultural  Improvement
and Power District,  as Lessor, and Papago Center,  Inc., as Lessee, and subject
to the provisions of Section 2.5 below, all amendments thereto and modifications
thereof, to which this Lease is and shall be subject and subordinate.

                  "Minimum Rent":  As defined and described in Section 3.1.

                  "Mortgage":  Any mortgage,  deed of trust, security agreement,
contract to convey,  pledge,  assignment  or other  transfer  for the purpose of
securing  any  debt  or  other  obligation  of or  which  creates  any  lien  or
encumbrance  upon all or any  portion of the right,  title or interest of Tenant
under this Lease, the leasehold estate hereby created or the Premises.

                  "Mortgagee":   The  holder,  trustee  or  beneficiary  of  any
Mortgage.
                                       3
<PAGE>
                  "Papago Park Center":  As defined in the Recitals.

                  "Papago Park Center Design Guidelines" or "Manual": Synonymous
with the Papago Park Center  Architectural  and  Development  Guidelines,  being
detailed  guidelines  adopted  and  amended  from time to time  pursuant  to the
Declaration   (subject  to  the  limitation  on  amendments  and  other  adopted
instruments set forth in the definition of  "Declaration"  above)  pertaining to
the location,  design and  construction of  improvements  within the Papago Park
Center.

                  "Permitted Assignee":  As defined in Section 17.1.

                  "Permitted Assignment":  As defined in Section 17.1.

                  "Permitted Mortgage":  As defined in Section 17.7.

                  "Permitted Sublease":  As defined in Section 17.2.

                  "Person": Any natural person, corporation, partnership, trust,
political  subdivision,  limited  liability  company  or other  person or entity
permitted by law to own real property in the State of Arizona.

                  "Premises":  As defined in Section 2.1.

                  "Prohibited  Use": Any of the following  uses or  occupancies:
any unlawful use or use in violation of any Legal Requirements;  any business or
use that emits offensive odors,  fumes, dust or vapors; any business or use that
is a public or private  nuisance;  any so-called  "head shop";  massage  parlor;
tatoo  parlor;  adult  bookstore  or store  selling or  exhibiting  pornographic
materials;  pornographic adult theater; adult lodging rented for periods of less
than  twenty-four  hours;  and any display of nude or  semi-nude  male or female
dancers or entertainers or a so-called "strip-tease" establishment.

                  "Sublease":  Any  agreement,  written or oral, by which Tenant
gives  any  Person  the use or  occupancy  of or any  benefit  flowing  from the
Premises  or any  portion  thereof,  including  without  limitation  any permit,
license or concession.

                  "Subtenant":  Any person having the use or occupancy of or any
benefit flowing from the Premises or any portion thereof pursuant to a Sublease.

                  "Tenant":  The  Tenant  named  herein and its  successors  and
assigns.

                  "Year":   Unless  otherwise   specified,   a  12-month  period
commencing on the Commencement  Date, unless the Commencement Date is other than
the first day of a 
                                       4
<PAGE>
calendar month,  in which event the first Lease Year (and each subsequent  Lease
Year)  shall  commence  on the first day of the  calendar  month  following  the
Commencement Date.


                                    ARTICLE 2
                                    ---------

                          DEMISE OF THE PREMISES; TERM
                          ----------------------------

         Section  2.1.  Premises.  Landlord  hereby  leases to Tenant and Tenant
hereby leases from Landlord,  upon and in consideration of the terms and subject
to the conditions contained herein, that certain parcel of real property located
in the City of Tempe,  County of Maricopa,  State of Arizona,  more particularly
described  in  Exhibit  "A"  attached  hereto  and  incorporated  herein by this
reference, which real property together with the Buildings and Landscaping to be
constructed thereon (as hereinafter  provided) is hereinafter referred to as the
"Premises"; subject, however, to the Master Ground Lease, all Legal Requirements
and all matters now of record,  including but not limited to those matters which
are listed and disclosed in Exhibit "B" attached hereto and incorporated  herein
by this reference,  and any other matters hereafter placed of record pursuant to
the provisions of the Declaration and/or the provisions of Article 26 hereof. It
is acknowledged  that the City will own the Buildings and Landscaping  while the
City Lease is in effect,  but Tenant  shall  remain  responsible  for the entire
Premises as set forth in this Lease.

         Section 2.2.  Term.  The term of this Lease (the "Lease Term") shall be
approximately  seventy-five (75) years commencing on the Commencement  Date, and
expiring at 12:00 midnight on the last day of March,  2069, unless this Lease is
sooner terminated as hereinafter provided.


         Section 2.3.  Commencement  Date;  Possession.  The initial  Lease Term
shall  commence  upon full  execution of this Lease (the  "Commencement  Date").
Notwithstanding  such  commencement,  Tenant  shall not have  possession  of the
Premises or be permitted to commence  any  construction  until after the last to
occur of:  (a)  Landlord's  receipt  of  Tenant's  grading  plans  for  Tenant's
contemplated  construction,   marked  to  show  approval  by  the  Architectural
Committee  of the Papago  Park Center  Association,  (b)  Landlord's  receipt of
evidence  that the bond  called for in Section  10.6 is in effect  (unless  such
requirement has been waived as hereinafter provided),  and (c) Tenant's delivery
to Landlord of evidence of the  insurance  called for in subparts (A) and (C) of
Section 5.1 below.

                  Section  2.4.  Title  Insurance.  Tenant  shall be entitled to
order a leasehold  title  insurance  policy  insuring the leasehold  interest of
Tenant or its  assignee R & K (as  defined  in Section  6.4 below) for an amount
equal  to  $3.72  per net  square  foot of real  property  included  within  the
Premises.  Landlord shall pay the one-time cost of a standard owner's  leasehold
title  insurance  policy,  and Tenant shall pay the  additional  premium for any
extended  coverage,  endorsements,  lenders'  policy,  survey or any other title
insurance  
                                       5
<PAGE>
requirements  of Tenant or Tenant's title insurer.  Landlord will use reasonable
efforts, at no expense to Landlord,  to comply with any reasonable  requirements
of the title  insurer  regarding  the  issuance of a title  insurance  policy to
Tenant.  Tenant's ability to obtain extended coverage title insurance,  lender's
title insurance or any particular title insurance  endorsements,  however, shall
not be a condition to the effectiveness of this Lease.

                  Section 2.5. Nondisturbance and Attornment Agreement. Prior to
the execution of this Lease,  Landlord shall use reasonable efforts to cause the
Lessor under the Master Ground Lease to execute,  have  acknowledged and deliver
to Tenant,  for its  benefit  and the  benefit  of any  assignee  pursuant  to a
Permitted  Assignment (as defined in Section 17.1.A below), a Nondisturbance and
Attornment Agreement substantially in the form attached to this Lease as Exhibit
"C", pursuant to which,  among other things,  the Lessor under the Master Ground
Lease shall (i)  consent to and agree to be bound by the option to purchase  set
forth in Section 3.3 below and the condemnation  provisions set forth in Article
15 below,  (ii)  (intentionally  omitted),  (iii) certify that the Master Ground
Lease is free from default and that this Lease constitutes a Permitted  Sublease
under the terms of the Master Ground Lease, (iv) agree that  notwithstanding any
breach or default by Landlord under the Master Ground Lease,  it will honor this
Lease and not disturb the rights of Tenant hereunder, provided that there is not
then in  existence  an Event of Default,  and (v) agree that Tenant shall not be
bound by any  amendment or  modification  made to the Master  Ground Lease which
materially  and adversely  affects  Tenant or the Premises if such  amendment or
modification is made without the prior written consent of Tenant. If Landlord is
unable  to obtain  said  Nondisturbance  and  Attornment  Agreement,  or if said
Nondisturbance  and  Attornment  Agreement  is delivered  but deviates  from the
requirements of Exhibit "C" in some material  respect (as determined by Tenant),
Tenant may either (i) waive strict conformance with this Section 2.5 and execute
this Lease,  whereupon  the other  provisions of the Lease shall have full force
and effect,  or (ii) refuse to execute  this Lease,  whereupon  this Lease shall
have no force or effect and neither Landlord nor Tenant shall have any liability
one to the other.


                                    ARTICLE 3
                                    ---------

                                      RENT
                                      ----

         Section 3.1. Rent.  Tenant shall pay rent  throughout the Lease Term as
follows:

                  A.       Minimum  Rent and  Adjustments.  Tenant  shall pay to
                           Landlord in such United States coin or currency as at
                           the time of  payment  shall be legal  tender  for the
                           payment of public and private  debts at the addresses
                           specified  or  furnished  pursuant  to  Section  20.1
                           during the Lease Term a minimum  annual rental (which
                           as  adjusted  from  time  to  time,  as   
                                       6
<PAGE>
                           hereinafter  provided,  is herein  referred to as the
                           "Minimum Rent") as follows:

                           (1) During the first two (2) Years of the Lease Term,
a minimum rental of Twelve Dollars ($12.00) per annum,  payable in equal monthly
installments in advance on or before the first (1st) day of each month;

                           (2) During Years three (3) through five (5) inclusive
of the Lease Term, a minimum  rental of $79,868.16  per annum (based on $.32 per
net square foot),  payable in equal monthly installments in advance on or before
the first (1st) day of each month;

                           (3) During  Years six (6) through ten (10)  inclusive
of the Lease Term, a minimum  rental of $87,355.80  per annum (based on $.35 per
net square foot),  payable in equal monthly installments in advance on or before
the first (1st) day of each month;

                           (4) During  Years  eleven (11)  through  fifteen (15)
inclusive of the Lease Term, a minimum  rental of $99,835.20 per annum (based on
$.40 per net square foot),  payable in equal monthly  installments in advance on
or before the first (1st) day of each month;

                           (5) Minimum Rent shall be payable in advance  without
notice in equal  monthly  installments  on the first (1st) day of each and every
month,  except that, if the  Commencement  Date is not the first day of a month,
the Minimum Rent for the month during which the  Commencement  Date occurs shall
be due and payable on the Commencement Date.

                  The  foregoing  rental  amounts are based upon the  assumption
that the real property  described in Exhibit "A" contains a total of 249,588 net
square feet.  In the event  Tenant,  at its own cost and  expense,  prior to the
Commencement   Date  commissions  a  survey  by  an  Arizona  licensed  surveyor
reasonably  acceptable to Landlord (the "Survey"),  and such Survey  establishes
that there are more or less than 249,588 net square feet  contained  within such
real  property,  the rental amounts set forth in  subparagraphs  (2) through (4)
above shall be adjusted to equal the actual net square footage contained in such
real property  times the  applicable per net square foot dollar amount set forth
in each  subparagraph.  For the purposes of this Section 3.1, net square footage
shall be calculated by excluding any portion of the Premises  located within the
beds of any existing roads,  streets,  alleyways,  access easements  (excluding,
however, landscape easements and utility easements) or rights-of-way, whether or
not of record.

                  B.       Minimum  Rent  Adjustments  Commencing  Year  Sixteen
                           (16).  After the  fifteenth  (15th) Year of the Lease
                           Term, the Minimum Rent shall
                                       7
<PAGE>
                           be subject to adjustment for the remaining Lease Term
                           in accordance with the formula set forth below.

                  In applying  the  formula,  the  following  definitions  shall
prevail:

                                    (a)  "Price  Index"  means the  Metropolitan
                           Phoenix  Consumer Price Index  compiled  quarterly by
                           the Center for  Business  Research  of the College of
                           Business  of  Arizona  State  University  or, if such
                           Price Index is discontinued,  a reasonably equivalent
                           index   selected  by  Landlord   which  includes  the
                           Phoenix, Arizona, metropolitan area.

                                    (b) "Average  Price Index" means the average
                           of the Price Indices  issued for the most recent four
                           (4)  quarters  prior to the date on which the Average
                           Price  Index  is to be  determined  for  which  Price
                           Indices have previously been announced.

                                    (c) "Base Index" is the average of the Price
                           Indices for the four (4) quarters  prior to the first
                           day of the calendar quarter of the 11th Year.

                  On the first  day of the  sixteenth  (16th)  Year of the Lease
Term  and on  the  first  day of  each  five  (5)  Year  period  thereafter  (an
"Adjustment Date"), the Minimum Rent shall be adjusted to equal the Minimum Rent
for the eleventh  (11th) Year of the Lease Term  multiplied  by a fraction,  the
numerator  of which is the Average  Price Index  applicable  on the date of such
adjustment and the  denominator of which is the Base Index;  provided,  however,
that in no event shall the Minimum Rent  determined by such  calculation be less
than the Minimum Rent for the immediately  preceding Year. In no event shall any
five-year increase be greater than 20%; provided, however, in no event shall the
escalation of Minimum Rent on any Adjustment  Date result in an adjusted  annual
Minimum Rent which exceeds ten percent (10%) of the then fee simple value of the
Premises, exclusive of the value of the Buildings and Landscaping.  Within three
(3) months prior to the applicable Adjustment Date, Landlord shall notify Tenant
of Landlord's  calculation of the adjusted Minimum Rent. If Tenant believes such
calculation  exceeds the ten  percent  (10%) of fee value  limitation  set forth
above,  Tenant shall  immediately  notify  Landlord  and shall  submit  Tenant's
proposed fee simple value of the Premises  (excluding the value of the Buildings
and Landscaping). If Landlord disagrees with such proposed value, Landlord shall
notify  Tenant  and the  parties  will  engage  in good  faith  negotiations  to
determine  the  applicable  fee simple  value of the  Premises  exclusive of the
Buildings and Landscaping.  If Landlord and Tenant are unable to agree upon such
value within thirty (30) days, Landlord and Tenant within ten (10) business days
thereafter  shall  appoint an  arbitrator  who is  mutually  acceptable  to both
parties.  Such  arbitrator  shall be a member of the American  Institute of Real
Estate  Appraisers  (or any successor  organization)  with a then current senior
designation of MAI, who possesses no conflict of interest or  relationship  with
either  party  that  would  impair  
                                       8
<PAGE>
impartiality,  and at least ten (10) years  experience in appraising  commercial
properties in Maricopa  County,  Arizona.  If the parties are unable to agree on
the appointment of such an arbitrator within such ten (10) day period, then upon
the request of either party, a qualified  arbitrator meeting such qualifications
shall be appointed by the president of the Maricopa County Board of Realtors (or
any organization  successor thereto),  or, in such president's failure to act by
the presiding  judge of the Superior Court of Maricopa  County.  Within five (5)
business days after  appointment  of the  arbitrator,  Landlord and Tenant shall
each submit to the  arbitrator  its respective  proposed  value.  The arbitrator
shall determine the fee simple value of the Premises, exclusive of the Buildings
and Landscaping,  by reviewing the two submitted values and selecting the one of
the two  submitted  values  which most  closely  approximates  the  arbitrator's
independent  opinion of the fee simple value of the  Premises,  exclusive of the
Buildings and  Landscaping.  The arbitrator shall not propose a third amount for
the value,  nor  propose a  modification  to the two  amounts  submitted  by the
parties;  instead, the arbitrator must choose one of the two values submitted by
the  parties.  In  determining  such value,  the  arbitrator  may  consult  such
evidence, experts,  consultants, or authorities as he or she deems necessary, or
such evidence, experts,  consultants, or authorities as may be offered by either
Landlord or Tenant,  provided such  consultation  takes place in the presence of
both  Landlord  and  Tenant and each  party has the right to  cross-examine  any
person so consulted.  The arbitrator will use his or her best effort to render a
decision  determining  such value within twenty (20) days, but in no event later
than forty-five (45) days,  after the receipt by the arbitrator of the proposals
submitted  by Landlord  and Tenant.  The  decision  shall be rendered in writing
executed by the  arbitrator  and  delivered  to each of the parties and shall be
final. If for any reason the arbitrator fails,  refuses,  or is unable to act, a
successor shall be appointed in the same manner as provided  herein.  Until such
time as the fee simple  value of the  Premises is agreed  upon by  Landlord  and
Tenant or otherwise  determined by the arbitrator,  Tenant shall continue to pay
the  Minimum  Rent at the rate  calculated  by  Landlord.  If the  Minimum  Rent
calculated  and  collected by Landlord is  determined  to exceed the ten percent
(10%) of fee value limitation set forth above,  Landlord shall rebate the excess
to Tenant.  The expense  and fees of the  arbitrator  shall be borne  equally by
Landlord and Tenant;  however, all consultation costs, expert fees and expenses,
including  attorneys'  fees,  incurred by each party shall be borne by the party
incurring the same.

Once the Minimum Rent is determined and adjusted  effective as of the Adjustment
Date,  the annual  Minimum Rent so  determined  shall be the  applicable  annual
Minimum Rent for each Year thereafter until the next Adjustment Date occurs.

         Section 3.2. Rent Absolutely Net.  Landlord and Tenant hereby expressly
covenant  and agree  that all rent and other  sums  payable  hereunder  shall be
absolutely  net to  Landlord  so that this Lease  shall  yield to  Landlord  the
Minimum  Rent herein  specified  each Year  during the Lease  Term,  free of any
charges,  assessments,  Impositions, or deductions of any kind charged, assessed
or imposed on or against Tenant or the Premises without  abatement,  diminution,
deduction or setoff by the Tenant, except as hereinafter  specifically 
                                       9
<PAGE>
provided.  Except for Mortgages  imposed by or on behalf of the Lessor under the
Master Ground Lease or Landlord for their own respective  account(s),  for which
such Lessor or  Landlord,  as  applicable,  shall be  responsible,  or except as
otherwise herein expressly set forth,  Landlord shall not be required to pay any
such charge,  assessment  or  Imposition  concerning  the Premises and all other
costs,  expenses,  and  obligations  of any  kind  relating  to  the  ownership,
maintenance  and  operation  of  the  Premises,   including  all   construction,
alterations,  repairs,  reconstruction and replacements as hereinafter provided,
if any, and all liabilities which may arise or become due during the Term hereof
shall be paid by Tenant, and Landlord shall be indemnified and saved harmless by
Tenant from and against any or all such costs,  expenses and obligations.  In no
event shall Landlord be responsible for any personal property taxes of Tenant or
any Person claiming by, through or under Tenant,  water or sewer rents, rates or
charges, charges for other private or public utilities, excises, levies, license
or permit fees,  expenditures  for  improvements  imposed or required by or as a
result of any Legal Requirements, or any other charges arising out of any use or
occupation  of the  Premises.  In no event shall Tenant be  responsible  for the
ground rent amounts payable under the Master Ground Lease.

         Section 3.3.      Option to Purchase.

                  A.       Tenant  shall  have  an  option  (the   "Option")  to
                           purchase the real property  which  constitutes a part
                           of the  Premises at the end of each of Years ten (10)
                           through fifteen (15) as follows:


            Year                      Purchase Price
            ----                      --------------
             10                       $1,622,322.00 ($6.50 per net square foot)
             11                       $1,634,801.40 ($6.55 per net square foot)
             12                       $1,647,280.80 ($6.60 per net square foot)
             13                       $1,659,760.20 ($6.65 per net square foot)
             14                       $1,672,239.60 ($6.70 per net square foot)
             15                       $1,684,719.00 ($6.75 per net square foot)

Each Purchase Price figure set forth above is based upon the assumption that the
real  property  which  constitutes a part of the Premises  contains  249,588 net
square feet. If the Survey  establishes that there are more or less than 249,588
net square feet,  the  pertinent  Purchase  Price shall be adjusted to equal the
actual net square  footage  contained in such real property times the applicable
per net square foot dollar amount for the pertinent Year set forth above.

                  B. Tenant may  exercise the Option at the end of each of Years
ten (10) through  fifteen (15) by  delivering  written  notice of such  exercise
("the Purchase  Notice") in accordance with the notice provisions of this Lease.
The Purchase  Notice shall be  delivered  (i) no earlier than one hundred  fifty
(150) days prior to the end (i.e.,  the last day of February)  of the  pertinent
Year,  and (ii) no later than sixty (60) days prior to the end of 
                                       10
<PAGE>
such pertinent  Year, for the Year in which the Option is to be exercised.  When
and if Tenant  exercises  the Option as provided  herein,  the purchase and sale
shall be conducted as follows:

                           (1) The  Purchase  Price shall be a net price  (i.e.,
exclusive of the items in subparagraph  [5] below) and shall be paid to Landlord
in immediately available funds at the closing.

                           (2) The  closing  shall be  conducted  by an  Arizona
licensed escrow agent  reasonably  acceptable to Landlord and Tenant and located
in Phoenix,  Arizona,  and shall  occur on or before  December 31 of the Year in
which the Option is exercised.

                           (3) The  real  property  shall  be  conveyed  "AS IS"
without representation or warranty whatsoever,  by special warranty deed subject
to (i) the deed  restriction  referred  to in  Section  8.2,  (ii)  all  matters
affecting  title as of the  date of this  Lease  (excluding  the  Master  Ground
Lease),  (iii) all matters subsequently placed of record by Landlord pursuant to
the  Declaration,  and (iv)  matters  created  by or with the  consent of Tenant
(excluding,  however,  Mortgages  imposed by or on behalf of  Landlord or Lessor
under the Master Ground Lease for their own respective  account(s),  if any, and
also  excluding the lien imposed by Tempe  Improvement  District No. 166,  which
Mortgages  and  improvement  lien shall be released or otherwise  removed at the
closing). With respect to the lien of Tempe Improvement District No. 166, Lessor
under the Master  Ground  Lease and Landlord  shall have the option,  in lieu of
obtaining  a  release  of said  lien,  to  provide  other  continuing  financial
assurances or arrangements insuring that Tenant, its successors and assigns, its
Permitted  Mortgagees,  future purchasers of the Premises and the Premises shall
not be held  financially  responsible for the lien imposed by Tempe  Improvement
District No. 166 or, if reasonably  commercially available at a reasonable cost,
Lessor under the Master  Ground  Lease or Landlord  may obtain  title  insurance
endorsements   insuring  Tenant,  its  successor  and  assigns,   its  Permitted
Mortgagees and future purchasers of the Premises against loss as a result of the
existence of said lien.  The Master Ground Lease shall be amended to delete said
real property therefrom at the closing.

                           (4) At closing, Lessor under the Master Ground Lease,
Landlord  and Tenant,  as  appropriate,  shall  execute  and deliver  such other
reasonable and customary documents as may be required by the escrow agent or any
title insurer in order to consummate  closing,  including,  without  limitation,
escrow instructions, FIRPTA and property value affidavits.

                           (5) Costs of title insurance,  escrow fees, recording
fees and other expenses of sale shall be paid by Tenant.
                                       11
<PAGE>
                           (6) Upon closing, this Lease shall terminate. Neither
Landlord nor the Lessor under the Master Ground Lease shall have any  continuing
indemnity  obligations of any kind with respect to the real property for matters
occurring after closing.

                           (7) Until  closing,  Tenant shall  remain  liable for
Minimum Rent,  Additional  Rent and all other charges  imposed upon Tenant under
this Lease.

                  C. The parties acknowledge that Tenant intends to avail itself
of the partial tax abatement  provided in A.R.S.  ss.  42-685(C) with respect to
the possessory interest tax on the Buildings and Landscaping.  Landlord does not
guarantee  that  Tenant will obtain such  partial  tax  abatement  and  Tenant's
ability to obtain such  partial tax  abatement  shall not be a condition to this
Lease.  However,  if Tenant does not obtain such  partial  tax  abatement  or if
Tenant  loses such  partial  tax  abatement,  during  the first  eight (8) years
following  the initial  issuance of a  certificate  of occupancy on any Building
(the "Relevant  Eight years")  because of the repeal or amendment of A.R.S.  ss.
42-685(C), then Tenant shall be entitled to a one-time reduction in the Purchase
Price if the Option is exercised  and closed in Year ten (10) of this Lease,  in
accordance with the following provisions:

                           Under current law, the parties  acknowledge  that the
maximum period for which the partial tax abatement  could be obtained covers the
entire  Relevant  Eight Years.  For each year of the  Relevant  Eight Years that
Tenant does not have the benefit of the  partial  tax  abatement  because of the
repeal or amendment of A.R.S.  ss.  42-685(C),  the Purchase Price in Lease Year
ten (10) shall be reduced by a factor of $.125 per net square  foot.  Thus,  for
example, if Tenant loses the partial tax abatement during the eighth year of the
Relevant  Eight  Years,  the  Purchase  Price  shall be reduced by $.125 per net
square foot;  if the Tenant loses the partial tax  abatement  during the seventh
year of the Relevant  Eight Years,  the Purchase  Price shall be reduced by $.25
per net square foot;  if the Tenant loses the partial tax  abatement  during the
sixth year of the Relevant  Eight Years,  the Purchase Price shall be reduced by
$.375 per net square foot; if the Tenant loses the partial tax abatement  during
the fifth year of the Relevant Eight Years,  the Purchase Price shall be reduced
by $.50 per net square  foot;  if the Tenant  loses the  partial  tax  abatement
during the fourth year of the Relevant Eight Years,  the Purchase Price shall be
reduced  by $.625 per net  square  foot;  if the Tenant  loses the  partial  tax
abatement  during the third year of the Relevant Eight Years, the Purchase Price
shall be reduced by $.75 per net square  foot;  if the Tenant  loses the partial
tax abatement  during the second year of the Relevant Eight Years,  the Purchase
Price shall be reduced by $.875 per net square foot;  and if the Tenant loses or
fails to obtain the partial tax abatement  during the first year of the Relevant
Eight Years,  the Purchase  Price shall be reduced by $1.00 per net square foot.
For purpose of this Section  3.3.C,  each year within the  Relevant  Eight Years
shall be  measured  from  the  anniversary  date of the  initial  issuance  of a
certificate of occupancy on any Building.  Further, if Tenant is entitled to the
benefit of such partial tax  abatement  for the period of six (6) or more months
in any such  year,  Tenant  shall be deemed to have  obtained  the  partial  tax
abatement  benefit for the entire  such year for  purposes  of  calculating  the
                                       12
<PAGE>
Purchase Price adjustment, and there shall be no proration of the Purchase Price
adjustment  to  account  for  any  loss of the  partial  tax  abatement  for the
remaining part of such year. Nothing herein shall be construed to entitle Tenant
to any Purchase Price  adjustment  resulting  from Tenant's  failure to meet the
requirements  in  A.R.S.  ss.  42-685(B),  which  requirements  are a  condition
precedent to obtaining the partial tax abatement under A.R.S. ss. 42-685(C),  or
Tenant's  failure to obtain such partial tax abatement for any reason other than
the repeal or amendment of A.R.S. ss. 42-685(C).

         Section  3.4.  Nonsubordination.  Except  with  respect to the  Option,
neither  this Lease nor any of  Landlord's  right,  title or interest  hereunder
shall be subject or subordinate  to any Mortgage or other liens or  encumbrances
of any nature or  description  hereafter  affecting  Tenant's  interest  in this
Lease.


                                    ARTICLE 4
                                    ---------

                                 ADDITIONAL RENT
                                 ---------------

         Section 4.1. "Additional Rent" and "Impositions" Defined. Following the
Commencement  Date, Tenant shall pay as "Additional Rent" during the Lease Term,
without  notice  (except  as  specifically   provided)  and  without  abatement,
deduction or setoff (except as hereinafter  provided in Section 4.3), before any
fine,  penalty,  interest,  or cost may be added  thereto,  or become  due or be
imposed by operation of law for the nonpayment  thereof,  all  "Impositions"  as
defined below:

                  "Impositions"   mean  all  real  property  taxes  or  required
payments  in lieu  thereof  and any taxes on rents or other  payments  hereunder
whether levied on Landlord or Tenant,  general  assessments (but not assessments
levied or imposed by Tempe  Improvement  District  No.  166,  which shall be the
responsibility of Landlord),  fees, assessments or other charges pursuant to any
Declaration,  and any other governmental or quasi-governmental  charges, general
and special,  ordinary and extraordinary,  foreseen and unforeseen,  of any kind
and nature  whatsoever  which at any time during the Term hereof may be assessed
and, if not paid,  could  become a lien on the  Premises or any part  thereof or
could become a charge against Landlord; provided, however, that:

                  A.  If,  by  law,  any  Imposition  may at the  option  of the
taxpayer be paid in  installments  (whether or not interest  shall accrue on the
unpaid  balance of such  Imposition),  Tenant may exercise the option to pay the
same (and any accrued  interest  on the unpaid  balance of such  Imposition)  in
installments and in such event,  shall pay such  installments as they become due
during the Lease Term before any fine, penalty,  further interest or cost may be
added thereto; and
                                       13
<PAGE>
                  B. Any  Imposition  (including  Impositions  which  have  been
converted  into  installment  payments  by Tenant,  as  referred to in Subpart A
above)  relating  to a fiscal  period of the taxing  authority,  a part of which
period is included  within the Lease Term and a part of which is included in the
period of time  after the  expiration  of the Lease  Term  (whether  or not such
Imposition shall be assessed,  levied, confirmed,  imposed upon or become a lien
upon the  Premises,  or shall  become  payable,  during the Lease Term) shall be
adjusted  between Landlord and Tenant as of the expiration of the Lease Term, so
that Tenant shall pay that portion of such Imposition  attributable to the Lease
Term and Landlord shall pay the remainder thereof.

                  C.  "Impositions"  shall not include,  and Tenant shall not be
liable or responsible for, any estate, inheritance,  succession, transfer, gift,
franchise,  income or excess  profits tax levied or imposed upon  Landlord,  its
affiliates, or their respective successors and assigns.

         Section  4.2.  Payments.  Tenant  shall  pay to  Landlord,  with and in
addition to the rental payments,  all taxes imposed by any governmental  unit on
the rentals  received by Landlord  pursuant to the terms of this Lease,  if any.
Tenant shall pay all other Impositions directly to the taxing authority or other
Persons to whom such payment is due.

         Section 4.3. Contest.  Tenant,  if it shall so desire,  may contest the
validity  or amount of any  Imposition,  in which  event,  Tenant  may defer the
payment  thereof during the pendency of such contest;  provided,  however,  that
Tenant shall give Landlord prior notice of any such contest and, upon request by
Landlord at any time after the same shall have become due,  Tenant shall deposit
with the Landlord an amount  sufficient to pay such contested item together with
the interest and penalties thereon (as reasonably estimated by Landlord),  which
amount  shall be  applied to the  payment  of such item when the amount  thereof
shall be finally fixed and  determined,  or Tenant shall provide other  security
reasonably acceptable to Landlord.  Nothing herein contained,  however, shall be
construed  so as to allow  such item to remain  unpaid for a length of time that
permits the  Premises or any part thereof to be sold for the  nonpayment  of the
same. If the amount so deposited  shall exceed the amount of such  payment,  the
excess  shall be paid to Tenant or, in case there shall be any  deficiency,  the
amount of such deficiency shall be promptly paid by Tenant to Landlord  together
with all interest, penalties or other charges accruing thereon. At any time that
the Tenant hereunder is an Institutional  Lender,  the requirements for deposits
set forth in this  Section  shall be waived by  Landlord.  For  purposes of this
Lease,  an  "Institutional   Lender"  shall  means  a  bank,  savings  and  loan
association,  insurance  company,  trust  company,  pension  fund,  mutual fund,
retirement fund, eleemosynary, education or other financial institution.

         Section 4.4. Assessment  Reduction.  Tenant may, if it shall so desire,
without  expense to Landlord,  endeavor at any time to obtain a reduction of the
assessed  valuation upon the Premises for the purpose of reducing taxes thereon.
Tenant shall be authorized 
                                       14
<PAGE>
to collect  any tax  refund  payable  as a result of any  proceeding  Tenant may
institute  for that  purpose,  and any such tax refund  shall be the property of
Tenant  if and to the  extent  that such  refund  is based on a payment  made by
Tenant.

         Section 4.5. Hold  Harmless.  Landlord shall not be required to join in
any action or  proceeding  referred to in Section 4.3 or 4.4 unless  required by
law or any rule or  regulation  in  order  to make  such  action  or  proceeding
effective,  in which  event any such  action or  proceeding  shall be subject to
Landlord's  prior written  consent,  which shall not be  unreasonably  withheld.
Landlord's  reasonable  costs and expenses in appearing or joining in any action
or  proceeding  referred to in Section 4.3 or 4.4 shall be reimbursed by Tenant;
and  where  practicable,   Tenant  shall  be  permitted  to  hire  the  attorney
representing  Landlord's  interests  in any such  action or  proceeding.  Tenant
hereby agrees to save Landlord harmless from all costs,  expenses,  claims, loss
or damage by reason of, in  connection  with,  on account of,  growing out of or
resulting from any such action or proceeding.


                                    ARTICLE 5
                                    ---------

                                    INSURANCE
                                    ---------

         Section 5.1.  Tenant  Obligations to Insure.  Tenant shall,  at its own
cost and expense, keep and maintain or cause to be kept and maintained,  for the
benefit of the  Landlord,  Tenant and,  where  applicable,  City,  the following
policies of insurance:

                  A.  During  Construction  of  the  Buildings.   Builders  Risk
Completed  Value  Insurance  during  the  course  of  the  construction  of  the
Buildings.

                  B. After the Completion of the Buildings. Following completion
of any  Buildings,  Tenant shall at all times maintain or cause to be maintained
insurance on the Buildings  against loss or damage by risks of fire,  windstorm,
malicious  mischief  and other  risks  normally  covered by a "special  form" or
extended  coverage  policy in amounts  sufficient to prevent  Landlord or Tenant
from becoming a co-insurer  under the terms of the applicable  policies,  but in
any event not less than the then full insurable value of the Buildings. The term
"full insurable value" shall mean actual replacement value without depreciation.
Such "full insurable  value" shall be determined from time to time (but not less
frequently than once in any twenty-four (24) calendar months) by the insurer or,
at the option of the Tenant, by an appraiser, engineer, architect, or contractor
employed  by  Tenant.  Tenant  shall  submit  to  Landlord  a copy of each  such
appraisal when received.

                  C. Liability. Tenant, throughout the Term of this Lease, shall
procure  and  maintain  in effect,  or cause to be procured  and  maintained  in
effect, general commercial liability insurance against damage or loss because of
or on  account  of  bodily  injuries  to or  
                                       15
<PAGE>
the death of any person or the  destruction  of or damage to the property of any
person,  occurring in, on, or about the Premises,  or due in any way to the use,
occupancy,  maintenance,  or operation thereof or of any building or improvement
upon the Premises,  or of the sidewalks  adjoining the same.  During the initial
construction  of the Buildings and  Landscaping,  said policy or policies  shall
provide   insurance  having  limits  of  not  less  than  Five  Million  Dollars
($5,000,000.00).  Upon issuance of a certificate of occupancy upon any Buildings
within the  Premises,  said policy or policies  shall provide  insurance  having
limits of not less than Five Million  Dollars  ($5,000,000.00)  combined  single
limit,  or such  higher  limits as may be  required  under the City  Lease.  The
minimum  policy  limits set forth above shall be subject to increase as of every
fifth anniversary of the Commencement Date to an amount equal to the greater of:
(a) $5,000,000.00; or (b) the product of $5,000,000.00 multiplied by a fraction,
the   numerator  of  which  is  the   Consumer  Price  Index -- All Items -- All
Consumers--U.S. Cities Average--(1982-1984 = 100) published by the United States
Department of Labor,  Bureau of Labor Statistics (the "CPI") for the month which
is three months prior to such fifth  anniversary and the denominator of which is
the CPI for the month  which is three  months  prior to the  Commencement  Date,
provided such increased amount is commercially  available,  and further provided
that in no event shall such insurance fall below the $5,000,000.00  limit once a
certificate of occupancy has been issued for any Building.  In the event the CPI
is  discontinued  or  substantially  modified,   Landlord  shall  substitute  an
alternative  price index,  published by the United  States  Government  or other
generally  accepted source for such information,  reconciled to December,  1993.
Tenant agrees that  provisions of this  paragraph as to maintenance of insurance
shall not be  construed as limiting in any way the extent to which Tenant may be
held  responsible  for the payment of damages to persons or  property  resulting
from Tenant's  activities,  or the  activities of its invitees and sublessees or
the  activities  of any other  person or persons for which  Lessee is  otherwise
responsible.

         Section 5.2.  Policies and  Companies.  All  insurance  provided  under
Sections  5.1(A),  (B) and (C) shall be effected  under  standard form policies,
issued  by  stock  or  mutual  company  insurers  of  recognized  responsibility
authorized  to do  business  in the State of  Arizona  which  are well  rated by
national rating  organizations and reasonably approved by Landlord and City. Any
such policy of insurance shall specifically  provide that it is primary coverage
and name  Landlord and Salt River  Project  Agricultural  Improvement  and Power
District as additional  insureds.  All policies of insurance  shall provide that
they may not be  modified  or canceled  without  thirty (30) days prior  written
notice to Landlord.

         Section 5.3. Policy Delivery,  Payment Evidence.  Concurrently with the
execution and delivery of this Lease and not less than thirty (30) days prior to
the  expiration  dates of any policies of insurance  furnished  pursuant to this
Article  5,  Tenant  shall  deliver  to  Landlord  evidence  of the  payment  of
applicable premiums together with a copy of the policy of insurance.  Landlord's
failure  to request  copies or  revision  of  insurance  levels  shall in no way
relieve  Tenant of its  obligation  to maintain all  insurance  required in this
Article 5.
                                       16
<PAGE>
         Section 5.4. Blanket Insurance. Nothing in this Article 5 shall prevent
Tenant from obtaining  insurance of a kind and in the amount  provided for under
this Article 5 under a blanket  insurance  policy or policies  which cover other
properties  owned or operated by Tenant or a Subtenant as well as the  Premises;
provided,  however,  that any  such  policy  of  blanket  insurance  of the kind
provided  for by Section 5.1 shall  specify  therein,  or Tenant  shall  furnish
Landlord a written  statement from the insurers under such policies  specifying,
the amount of the total insurance allocated to the Premises,  which amount shall
be not less than the amounts  required  herein.  No blanket policy shall contain
any  clause  that would  result in any  insured  thereunder  being  required  or
permitted to carry insurance with respect to the property  covered thereby in an
amount less than the full  insurable  value of such property in order to prevent
the  insured  therein  named  from  becoming a  co-insurer  of any loss with the
insurer under such policy.

         Section 5.5. Expiration of Term. If Landlord desires to assume existing
insurance  coverage at the  expiration of the Lease Term,  all policies  (except
blanket policies) shall be transferred to Landlord free of all right,  title and
interest of Tenant and those  claiming  under Tenant,  and Landlord shall pay to
Tenant  an  amount  equal  to  the  unearned  premiums  apportioned  as of  such
expiration  date.  If Landlord  does not desire to assume  existing  policies of
insurance at the expiration of the term hereof,  all existing  policies shall be
canceled at no expense to  Landlord,  and Tenant shall be entitled to any refund
of premium.

        Section 5.6. Risk of Loss. At no time during the Lease Term hereof, will
Landlord be required to carry any insurance  covering or affecting the Premises.
Tenant  assumes  the risk of any loss or damage to or claims  arising  out of or
concerning  the  Premises  throughout  the  Lease  Term,  except  loss or damage
resulting  from the  negligence or willful  misconduct of Landlord,  its agents,
servants, contractors or employees.

         Section 5.7. Failure to Maintain Insurance.  If Tenant fails or refuses
to provide a copy of the required insurance policies,  together with evidence of
payment of premiums  therefor as  required by Section 5.3 herein,  or  otherwise
fails or refuses to procure or  maintain  insurance  as  required by this Lease,
Landlord shall have the right,  at Landlord's  election,  and after fifteen (15)
days written  notice to Tenant and Tenant's  failure to cure, in addition to any
other right or remedy, to procure and maintain such insurance. However, Tenant's
right to receive notice and an opportunity to cure is conditioned  upon Landlord
timely  receiving  actual notice of Tenant's  default with respect to insurance,
and in the event  Landlord  fails to  receive  at least  thirty  (30) days prior
actual notice of any expiration, cancellation, modification or failure to obtain
or maintain any of such insurance, Landlord shall not be required to give Tenant
any notice or opportunity to cure prior to Landlord's  obtaining such insurance.
In any such event,  the  premiums  paid by Landlord  shall be due and payable by
Tenant to Landlord on the first day of the month following the date on which the
premiums were paid,  together with interest as provided in Section 7.1. Landlord
                                       17
<PAGE>
shall give prompt  notice of the payment of such  premiums,  stating the amounts
paid and the name(s) of the insured(s).

         Section 5.8. Availability of Insurance. Notwithstanding anything to the
contrary contained herein, in the event that any of the insurance required above
is not commercially available at commercially reasonable rates to Tenant through
insurance brokers located in the Metropolitan  Phoenix area, such that it is not
reasonably  possible  for  Tenant to  provide  the exact  type(s)  or amounts of
coverage called for herein,  then Landlord and Tenant shall negotiate and modify
this Lease as  necessary  to permit  Tenant to obtain and  maintain  alternative
coverages that are  commercially  available at commercially  reasonable rates so
long as such alternative coverages approximate as closely as reasonably possible
the types and amounts of insurance specified above.


                                    ARTICLE 6
                                    ---------

                                    SURRENDER
                                    ---------

         Section 6.1.  Surrender--Removable  Property.  Subject to the rights of
the City with respect to the Buildings under the City Lease, upon the expiration
of the Lease Term or on the sooner termination  thereof,  Tenant shall peaceably
and quietly  leave,  surrender  and yield up to the Landlord all of the Premises
broom-clean  and free of occupants  and shall repair all material  damage to the
Premises  caused by or resulting  from the removal of any removable  property of
Tenant or of  Subtenants.  Any property of Tenant or any  Subtenant  which shall
remain  in any  Building  after  the  expiration  of the  Lease  Term or  sooner
termination  thereof shall be deemed to have been abandoned and may,  subject to
Article 27 hereof and to the rights of the City under the City Lease,  either be
retained by  Landlord as its  property or disposed of in such manner as Landlord
may see fit. If such  property or any part  thereof  shall be sold by  Landlord,
Landlord  shall  receive and retain the  proceeds of such sale.  Tenant shall be
liable to  Landlord  for any and all costs of removal  and the repair of any and
all material damages caused thereby.

         Section 6.2.  Waste.  Tenant shall not commit or suffer to be committed
any waste of the Premises.

         Section 6.3.  Title.  Subject to the provisions of Section 10.5 hereof,
at the end of the Lease Term or any earlier  termination  thereof,  title to the
Buildings and Landscaping shall, at the election of Landlord, automatically vest
in Landlord  without the  requirement  of any deed,  conveyance  or bill of sale
thereon.  However,  if Landlord should require any such document in confirmation
thereof, Tenant shall execute, acknowledge and deliver the same.
                                       18
<PAGE>
         Section 6.4. Initial  Environmental Site Assessment.  Prior to the date
of this Lease, Landlord shall procure a phase I environmental site assessment of
the Premises from Western  Technologies,  Inc. (the  "Engineer"),  the report of
which shall be certified to Landlord,  Tenant, First Interstate Bank of Arizona,
NA ("FIB"),  and R&K  Development,  LLC ("R&K") and shall be attached  hereto as
Exhibit "D" and  incorporated  herein by this reference (the "Initial Phase I").
Landlord shall indemnify,  defend,  protect and hold Tenant,  R&K, FIB and their
respective  successors  and assigns  harmless  for, from and against any and all
liability, obligation, claims, actions, costs and expenses (including reasonable
attorneys' fees and costs) arising out of or in connection with the existence of
any condition on, under or about the Premises existing prior to the date of this
Lease which violates any Environmental Laws, except to the extent arising out of
any condition on, under or about the Premises existing prior to the date of this
Lease which is caused by any act, omission or negligence of Tenant,  Subtenants,
their employees,  agents, licensees,  guests or invitees. Further, if and to the
extent  Landlord  fails to so indemnify  Tenant,  R&K, FIB and their  respective
successors and assigns,  Tenant,  R&K, FIB and their  respective  successors and
assigns shall be  subrogated to Landlord's  rights with respect to the indemnity
provided by the Lessor under the Master  Ground  Lease in Section  2.09.3 of the
Master Ground Lease.

         Section 6.5.  Interim Site  Assessments.  At any time Tenant desires to
assign its  interest  under this Lease in  accordance  with  Section 17.1 hereof
(other than the Initial Assignment  contemplated by Section 17.17 below), Tenant
shall   commission  a  phase  I  environmental   site  assessment   meeting  the
requirements of the Final Phase I (defined  below),  which phase I environmental
site assessment  shall be dated no earlier than six (6) months prior to the date
of such proposed assignment (an "Interim Site Assessment").  If the Interim Site
Assessment  reveals  the  existence  or  potential   existence  of  any  adverse
environmental  condition,  Landlord shall not be required to accept such Interim
Site  Assessment,  and  Landlord  shall  promptly  cause  a  separate  phase  II
environmental  report to be  prepared,  at Tenant's  expense.  If such  separate
report  indicates  any  condition  on,  under  or  about  the  Premises  arising
subsequent  to the date of this Lease which  violates  any  Environmental  Laws,
Tenant shall indemnify,  defend,  protect and hold Landlord and the Lessor under
the Master Ground Lease  harmless  for, from and against any and all  liability,
obligation,  claims, actions, costs and expenses (including, but not limited to,
costs of remediation and reasonable  attorneys'  fees and costs),  except to the
extent  arising out of any  condition  on, under or about the Premises  which is
caused by any act,  omission or negligence of Landlord,  Lessor under the Master
Ground Lease, their respective employees, agents, licensees, guests or invitees.

         Section  6.6.  Final  Phase I.  Within  three  (3)  months  immediately
preceding the  expiration of the Term or within two (2) months after any earlier
termination  of the  Lease,  Tenant  shall  cause a phase I  environmental  site
assessment of the Premises to be conducted by the Engineer or another  qualified
engineer  licensed in the State of Arizona  acceptable to Landlord,  and cause a
final  report to be issued and  certified  to Landlord in  connection  therewith
(collectively,  the  "Final  Phase  I").  The Final  Phase I shall be  conducted
pursuant  
                                       19
<PAGE>
to a scope of work that is equal to or in  excess of the scope of work  pursuant
to  which  the  Initial  Phase  I  was  conducted  and  shall  include,  without
limitation,  a report on the Buildings  and/or any other existing  improvements.
Tenant shall indemnify,  defend,  protect and hold Landlord and the Lessor under
the Master Ground Lease  harmless  for, from and against any and all  liability,
obligation,  claims, actions, costs and expenses (including, but not limited to,
costs of remediation and reasonable attorneys' fees and costs) arising out of or
in  connection  with the  existence  of any  condition  on,  under or about  the
Premises  arising  subsequent  to the  date of this  Lease  which  violates  any
Environmental  Laws,  except  to the  extent  caused  by any  act,  omission  or
negligence of Landlord,  Lessor under the Master Ground Lease,  their respective
employees,  agents,  licensees,  guests or invitees.  Tenant's  indemnity  shall
include but not be limited to, the full  correction  of the violation of law and
the restoration of the Premises, at Tenant's expense.

         Section  6.7.  Tenant's  Failure  to Obtain the Final  Phase I.  Should
Tenant fail to deliver to  Landlord a Final  Phase I showing the  Premises to be
free of adverse  environmental  conditions,  then  Landlord may cause a separate
environmental  report or reports to be prepared to like  effect  (including,  if
necessary,  any phase II or  subsequent  reports)  and Tenant shall be liable to
Landlord for the actual cost of such separate report(s).

         Section 6.8.  Survival of Provisions.  The provisions of this Article 6
shall survive the expiration or any termination of this Lease.


                                    ARTICLE 7
                                    ---------

                        LANDLORD'S PERFORMANCE FOR TENANT
                        ---------------------------------

         Section 7.1. Cures--Rights, Costs, and Damages. If Tenant shall fail to
pay any  Imposition  or make any other  payment  required  to be made under this
Lease or shall  default in the  performance  of any other  covenant,  agreement,
term,  provision,  limitation or condition herein contained,  Landlord,  without
being under any  obligation to do so and without  thereby  waiving such Event of
Default,  may make such payment  and/or remedy or correct such other default for
the account and at the expense of Tenant.  Except as otherwise  specifically set
forth herein,  Landlord  shall give Tenant thirty (30) days prior written notice
before  taking any such  action;  provided,  however,  Landlord  may take sooner
action as provided in Section 5.7 with respect to Tenant's  failure to obtain or
maintain the required insurance hereunder, and may take immediate action without
notice to Tenant in the event of an emergency,  or if the  possibility of a lien
against the Premises is imminent.  Bills for any reasonable  expense incurred by
Landlord in connection therewith, and bills for all such reasonable expenses and
disbursements  of  every  kind  and  nature  whatsoever,   including  reasonable
attorneys' fees and reasonable out-of-pocket expenses, involved in collection or
                                       20
<PAGE>
endeavoring  to  collect  the rent or  additional  rent or any part  thereof  or
enforcing or  endeavoring  to enforce any other right against Tenant under or in
connection with this Lease or pursuant to law,  including without limitation any
such cost,  expense and  disbursements  involved in instituting  and prosecuting
summary  proceedings,  as well as bills  for any  property,  material,  labor or
services  provided,  furnished or rendered or caused to be furnished or rendered
by Landlord to Tenant  with  respect to the  Premises  and other  equipment  and
construction  work done for the account of the Tenant  pursuant to Sections  8.4
and/or 8.5 hereof,  together  with  interest at the rate per annum equal to four
percent (4%) over the prime rate then  published in the Wall Street Journal or a
reasonably equivalent rate selected by Landlord (eg., if the "prime rate" is 4%,
then the  rate  hereunder  shall be 4%  higher;  in  other  words,  8%) from the
respective  dates of the Landlord's  making of each such payment or incurring of
each such cost or expense  until paid in full  hereunder may be sent by Landlord
to Tenant  immediately or at any time at Landlord's  option and shall be due and
payable in full to Landlord immediately upon demand.


                                    ARTICLE 8
                                    ---------

                         USE AND MAINTENANCE OF PREMISES
                         -------------------------------

         Section  8.1.  Absence of  Warranties.  Tenant has leased the  Premises
after a full and complete  examination of the physical condition thereof as well
as the title  thereto and  knowledge of its  presently  permitted  uses.  Tenant
accepts the same in the  condition or state in which they now exist  without any
representation  or  warranty,  express or implied in fact or by law, by Landlord
and without recourse to Landlord as to the title or access thereto,  the nature,
condition or  usability  thereof  (except as  otherwise  provided in Section 6.4
above) or the use or uses to which the  Premises or any part thereof may be put.
Except as  otherwise  provided  in  Section  6.4  above,  Landlord  shall not be
required  to  furnish  any  services  or  facilities  or to make any  repairs or
alterations  in or to the  Premises  throughout  the Lease Term.  Tenant  hereby
assumes  the full  and  sole  responsibility  for the  condition,  construction,
operation,  repair, demolition,  replacement,  maintenance and management of the
Premises.

         Section 8.2.  Permitted Uses.  Subject to the  Declaration,  applicable
Insurance  Requirements and Legal  Requirements,  and the other  requirements of
this Lease, the Premises may be used for any lawful purpose permitted by each of
the  following:  I-1  Zoning as  defined  by City of Tempe in the year that this
Lease is executed;  and the Planned Area Development for Papago Park Center, and
for no other  purpose  without the prior written  consent of Landlord.  Landlord
shall not undertake or seek any zoning changes or any change to the Planned Area
Development  with respect to the Premises  that would  materially  and adversely
affect the  Premises or Tenant's  rights or  obligations  with  respect  thereto
without  Tenant's  consent.  The  Premises  shall be used at all times solely in
compliance  with all  Legal  Requirements.  Under  no  circumstances  shall  the
Premises  be used  for any  Prohibited  Use.  Further,  should  Tenant  elect to
purchase the Premises, the 
                                       21
<PAGE>
Tenant  agrees to accept in the deed a  restriction  and covenant that runs with
the land that no Prohibited Use shall ever be permitted on the Premises.

         Section 8.3. Maintenance and Repairs. Tenant shall take reasonable care
of the Premises  consistent  with the  requirements  of the  Declaration and any
Legal Requirements. Tenant shall also keep the sidewalks and gutters in front of
the  Premises  free and clear from  rubbish and shall not  obstruct  the same or
allow the same to be obstructed in any manner.

         Section  8.4.  Performance  by  Landlord.  In the event Tenant fails to
maintain  and repair the  Premises  in the  condition  required  by Section  8.3
hereof,  and  subject  to the  terms  of the  City  Lease  with  respect  to the
Buildings,  Landlord,  without  being under any  obligation to do so and without
thereby waiving any default, may after thirty (30) days written notice to Tenant
and  Tenant's  failure to cure (or, in the event of an  emergency or a threat to
safety, immediately and without notice to Tenant), perform or have performed any
and all such work as Landlord, in its reasonable discretion,  deems necessary to
maintain or restore the  Premises to the  required  condition.  Any and all work
performed  by or for  Landlord  pursuant to this  Section 8.4 shall be deemed to
have been  undertaken  for and at the expense of Tenant.  All  reasonable  costs
incurred by Landlord in undertaking such work shall be subject to the provisions
of Section 7.1 hereof.

         Section  8.5.  Alterations.  Except as  provided  in Article 10 hereof,
Tenant shall not erect any  structures,  make any  improvements  or do any other
construction  work  on  the  Premises  or  alter,  modify,  or  make  additions,
improvements  or repairs to or  replacements  of any  structure  now existing or
built at any time  during the Lease Term or install  any  fixtures  (other  than
trade fixtures  removable without injury to the Premises) which would (i) affect
the structural integrity of the Buildings, (ii) interfere with or affect utility
systems on the Premises (other than heating,  ventilating,  and air conditioning
systems  installed by Tenant) or (iii)  require  filing of plans with,  or other
approval by, any governmental  authority having jurisdiction thereof,  except in
accordance with the provisions of the Declaration.


                                    ARTICLE 9
                                    ---------

                                   COMPLIANCE
                                   ----------

         Section 9.1.  Tenant  Obligations.  Tenant shall assume and perform any
and all  obligations  of  Landlord  under any  Declaration  or other  covenants,
easements  and  agreements  now affecting the title to the Premises or hereafter
placed of record pursuant to the Declaration and/or Article 26 hereof, and shall
diligently  comply  with,  at its own expense  during the Lease Term,  all Legal
Requirements and Insurance Requirements, the intention of the parties being that
Tenant  during the Lease Term shall  discharge  and perform all  obligations  of
Landlord  with  regard to the  Premises  (other  than  obligations  of  Landlord
expressly agreed by Landlord herein to be performed by Landlord), as well as all
                                       22
<PAGE>
obligations  of Tenant,  pertaining  to the  Premises,  and shall save  Landlord
harmless  therefrom,  so that at all  times  the rent  and  other  sums  payable
hereunder shall be net to the Landlord without  reduction on account of any such
matter.

         Section 9.2. Certificate of Occupancy.  Tenant shall obtain and keep in
full force and effect at all times any  Building  is occupied a  certificate  of
occupancy  with  respect to the  Premises  as may at any time be required by any
governmental  agency  having  jurisdiction  thereof.  If at any  time any of the
Buildings are unoccupied,  Tenant may allow the certificate of occupancy for any
unoccupied Building to lapse;  provided Tenant shall continue to maintain,  keep
safe and insure the Premises during such time, and further  provided that Tenant
shall obtain a new or renewed certificate of occupancy at the time such Building
is re-occupied.

                                   ARTICLE 10
                                   ----------

                    CONSTRUCTION OF BUILDINGS AND LANDSCAPING
                    -----------------------------------------

         Section  10.1.  General  Requirements.   Landlord  acknowledges  Tenant
intends to  construct  Buildings on the real  property  which is subject to this
Lease,  and convey title to such  Buildings to the City upon  completion  of the
Buildings.  Landlord further  acknowledges that Tenant intends to lease back the
Buildings  from the City under the City Lease.  The  Buildings  and  Landscaping
shall be constructed by Tenant in accordance  with the  requirements of the City
Lease and this  Article  10. The  initial  Buildings  and  Landscaping  shall be
completed by June 30, 1995,  subject to Force  Majeure  delays.  As used in this
Lease,  the term  "Force  Majeure"  shall  mean war,  fire,  earthquake,  flood,
unavailability  of materials and court orders  (provided the  unavailability  of
materials or court  orders do not result from the conduct of the party  claiming
the delay).  Tenant shall notify  Landlord in writing of any Force Majeure event
within  fifteen  (15)  business  days after it  occurs.  In the event of a Force
Majeure delay,  the period for performance  shall be extended for a period equal
to the Force Majeure delay; provided, such performance shall not be extended for
any Force Majeure period occurring more than fifteen (15) business days prior to
the date notice of such Force Majeure is given by Tenant to Landlord.

         Section  10.2.   Approval  of  Final  Plans.   Before   commencing  any
construction,  Tenant will submit to Landlord and obtain Landlord's  approval of
all  final  construction  plans  and  specifications  for  construction  of  the
Buildings and Landscaping.  In like manner,  Tenant shall submit to Landlord and
obtain Landlord's  approval of all amendments to said final  construction  plans
and  specifications  at least  seven (7) days  prior to giving  effect  thereto.
Within ninety (90) days following  completion of the Buildings and  Landscaping,
Tenant shall deliver to Landlord true and complete copies, in duplicate,  of the
final "as built" plans and specifications.  The right of Landlord to approve the
final plans and specifications and any amendment thereto is for the sole benefit
of Landlord and may be waived by Landlord in its sole and unfettered discretion.
Landlord's  rights hereunder are for the sole benefit of 
                                       23
<PAGE>
Landlord,   and  approval  by  Landlord  shall  not  constitute  an  opinion  or
representation  by Landlord as to the sufficiency  thereof or impose any present
or future liability or responsibility upon the Landlord.

         Section  10.3.  Government  Approval.  Prior  to  commencement  of  any
construction,  Tenant will obtain the approval of the final  construction  plans
and specifications by the City and any and all federal,  state,  municipal,  and
other governmental authorities,  offices, and departments having jurisdiction in
the matter, and provide conformed copies of executed approvals to Landlord,  and
will obtain all necessary building permits.

         Section  10.4.  Construction  Standards.   Tenant  will  construct  the
Buildings and the Landscaping in a good, careful, proper and workmanlike manner,
in substantial  accordance with the final construction plans and specifications,
and  otherwise  in strict  accordance  with the  Architectural  and  Development
Guidelines and all Legal Requirements.  Upon completion, Tenant shall provide to
Landlord a certificate  of  substantial  completion in a form and executed by an
architect reasonably  satisfactory to Landlord certifying that the Buildings and
the Landscaping have been substantially completed as above provided.

         Section  10.5.  Ownership of  Buildings  and  Improvements.  During the
existence of the City Lease, title to all Buildings and Landscaping  constructed
or installed on the Premises by Tenant shall be in the City. In the event Tenant
exercises its option to purchase such  Buildings and  Landscaping  from the City
pursuant to the option to purchase  contained  in the City Lease,  title to such
Buildings  and  Landscaping  shall  thereafter be in the Tenant during the Lease
Term. In the event this Lease  expires or is terminated  for any reason prior to
the expiration or termination of the City Lease,  Tenant's right to exercise the
option to purchase  the  Buildings  and  Landscaping  under the City Lease shall
automatically  be  transferred  to Landlord  and  Landlord  shall be entitled to
exercise  the  same by  payment  of the  option  purchase  price  to the City as
provided  in the City Lease,  without  further act or deed of Tenant and without
the payment of compensation to Tenant. Unless such Buildings and Landscaping are
then owned by the City, on the  expiration or sooner lawful  termination of this
Lease,  all Buildings and Landscaping  which  constitute a part of the Premises,
exclusive  of  removable  trade  fixtures  and  personal  property of Tenant and
Subtenants,  shall,  at  the  election  of  Landlord,  without  the  payment  of
compensation to Tenant or others,  automatically and without further act or deed
become the property of Landlord  free and clear of all claims and  encumbrances.
Notwithstanding  the  foregoing,  after the  expiration or  termination  of this
Lease,  Tenant shall upon request of Landlord execute such further  documents or
instruments  as may be necessary or  appropriate to transfer to Landlord any and
all rights,  interests and claims of Tenant to the  Buildings  and  Landscaping.
Additionally, Tenant shall assign to Landlord, and Landlord shall be entitled to
the benefit of, any licenses,  warranties or guarantees applicable to equipment,
systems,  fixtures or personal property conveyed or otherwise  transferred to or
for the benefit of Landlord under this Lease. 
                                       24
<PAGE>
         Section 10.6.  Requirement of Construction  Contract.  All improvements
which Tenant is required or permitted to construct upon the Premises pursuant to
this Lease  shall be  constructed  pursuant to written  construction  contracts,
copies of which,  and of all amendments  thereto,  shall be provided to Landlord
prior to the  commencement of  construction.  All such contracts shall contain a
provision  to the effect that no lien for labor,  materials  or supplies  may be
filed  against the  interests  of the  Landlord  or the Lessor  under the Master
Ground  Lease,  nor shall  Landlord or the Lessor under the Master  Ground Lease
have responsibility or liability therefor,  and such contracts shall require the
parties  thereto  to  inform  subcontractors  and  material  suppliers  of  such
non-responsibility   and  non-liability.   The  provisions  of  the  immediately
preceding  sentence  shall  not,  however,  be  applicable  with  respect to the
construction  of the Buildings  and  Landscaping  so long as such  Buildings and
Landscaping are constructed  and/or installed,  as the case may be, by Sun State
Builders. Unless waived by Landlord as provided below, prior to the commencement
of  construction,  Tenant  shall,  or shall cause the  contractor  to provide to
Tenant a performance  bond,  with  endorsements  naming  Landlord and Salt River
Project Agricultural Improvement and Power District as additional obligees under
such bond, in the full amount of the cost of such work in form and substance and
issued by a bonding company  satisfactory  to Landlord  sufficient to assure the
completion of such work. Tenant also shall cause a labor and material payment
bond conforming to the requirements of A.R.S.  Section 33-1003 and a copy of the
contract to which it relates to be recorded in the office of the County Recorder
of Maricopa County, Arizona, prior to the performance of any labor or furnishing
of any materials, machinery, fixtures or tools contemplated by such contract and
shall take any and all other  actions as may be necessary  under A.R.S.  Section
33-1003 in order to prevent mechanics' or materialmen's  liens from attaching to
the Premises or any portion thereof. Tenant shall provide Landlord with true and
accurate  copies  of such  bonds  and  endorsements.  Notwithstanding  the  bond
requirements  set forth  above,  in the event  that the Master  Ground  Lease is
amended  to  permit   alternatives  to  such  bonds  prior  to  commencement  of
construction,  Landlord  may waive  the bond  requirements  set forth  above and
alternatively  may  require  alternative  forms  of   collateralization   and/or
contractual security reasonably  acceptable to Landlord.  In connection with the
construction of the initial Buildings and Landscaping, Landlord shall accept, as
an alternative to such bonds, a security deposit in the amount of Fifty Thousand
and NO/100 Dollars  ($50,0000.00)  subject to and in accordance with the further
terms  and  provisions  of  this  section.  On or  before  the  commencement  of
construction of the initial  Buildings and Landscaping,  Tenant shall deliver to
Landlord a sum of Fifty Thousand and NO/100 Dollars ($50,000.00) as assurance of
Tenant's full and faithful performance of its construction and other obligations
under this Lease during the period from the  commencement  of such  construction
through and including  the date (the  "Release  Date") which is the later of (i)
one  hundred  twenty  (120)  days after  Tenant  opens for  business  within the
Premises,  (ii) ninety (90) days after Tenant records (or causes to be recorded)
a notice of completion with respect to the construction of the initial Buildings
and  Landscaping,  or (iii) ninety (90) days after completion of construction of
the initial  Buildings and  Landscaping.  If prior to the Release  Date,  Tenant
commits a Event of Default, Landlord may use, apply or retain all or part of the
security  deposit  for the  payment of any 
                                       25
<PAGE>
amount which Landlord may spend or become obligated to spend because of Tenant's
committing an Event of Default or to  compensate  Landlord for any other loss or
damage which  Landlord may suffer as a result  thereof.  On the Release Date, as
long as there is not then in  existence  an  Event of  Default,  Landlord  shall
release the  security  deposit  (less any amounts  previously  used,  applied or
retained as  permitted  herein) to Tenant.  Tenant  shall not be entitled to any
interest earned on the security deposit.

         Section 10.7.  Application of this Article.  Except with respect to the
provisions of this Article which are expressly  limited to the  construction  of
the initial  Buildings and  Landscaping,  the  provisions of this Article 10 are
applicable  to  the   construction  of  not  only  the  initial   Buildings  and
Landscaping, but any future Buildings and/or Landscaping.


                                   ARTICLE 11
                                   ----------

                         IMPAIRMENT OF LANDLORD'S TITLE
                         ------------------------------

         Section 11.1. No Liens. Tenant shall not create or suffer to be created
or to remain,  and shall  within  thirty  (30) days  after  notice of the filing
thereof pay in full and  discharge or provide  bonding  sufficient to obtain the
release of any  mechanic's,  laborer's or  materialman's  lien which might be or
become a lien,  encumbrance  or charge upon the  Premises or any part thereof or
the  income  therefrom,  and Tenant  will not  suffer any other  matter or thing
arising out of Tenant's use and  occupancy  of the Premises  whereby the estate,
rights and  interests of Landlord in the  Premises or any part thereof  might be
impaired.

         Section 11.2. Discharge. If any mechanic's,  laborer's or materialman's
lien  shall at any time be  filed  against  the  Premises  or any part  thereof,
Tenant, within thirty (30) days after notice of the filing thereof,  shall cause
such lien to be discharged of record by payment,  deposit,  bond, order of court
of competent jurisdiction or otherwise. Tenant shall immediately notify Landlord
in writing of any such lien which might  attach or be claimed at any time and of
its action to either  satisfy or obtain the release of the lien. If Tenant shall
fail  to  cause  such  lien to be  released  or  discharged  within  the  period
aforesaid,  then,  in addition to any other right or remedy,  Landlord  may, but
shall not be  obligated  to,  discharge  the same  either by paying  the  amount
claimed to be due or by  procuring  the release of such lien by bonding or other
means,  and any amount so paid by Landlord  and  reasonable  costs and  expenses
incurred by Landlord in connection  therewith shall  constitute  additional rent
payable by Tenant to Landlord on demand.

         Section 11.3. No Implied Consent. Nothing contained in this Lease shall
be  deemed or  construed  in any way as  constituting  Landlord's  expressed  or
implied  authorization,  consent or request  to any  contractor,  subcontractor,
laborer  or  materialman,  architect  or  consultant  for  the  construction  or
demolition of any  improvement,  the performance of any 
                                       26
<PAGE>
labor or services  or the  furnishing  of any  materials  for any  improvements,
alterations to or repair of the Premises or any part thereof.


                                   ARTICLE 12
                                   ----------

                                   INSPECTION
                                   ----------

         Section 12.1.  Inspection  and Entry.  Landlord shall have the right at
any  time  and from  time to time  during  Tenant's  or any  Subtenant's  normal
business  hours to enter upon the  Premises,  or any part  thereof,  at any time
during  the  Lease  Term  for  the  purposes  of   inspecting   any  work  under
construction, ascertaining the condition of the Premises and determining whether
Tenant is observing and performing all of its  obligations  under this Lease, or
of showing the Premises to any  prospective  Mortgagees (and during the last two
(2) years of the Lease Term, to any prospective  purchaser or lessee),  all with
or without cause and without hindrance or molestation from Tenant, provided that
Landlord shall give Tenant at least  twenty-four  (24) hours notice prior to any
inspection  of any  building  interior and further  provided  Tenant may require
Landlord to be escorted throughout the Premises,  but Landlord shall nonetheless
have full  access.  The  notice  and escort  requirements  provided  for in this
paragraph  shall  not  be  required  if  and to the  extent  that  Landlord  has
reasonable  cause  to  believe  that an  emergency  exists  requiring  immediate
attention.  Any  inspection  or entry by  Landlord  onto the  Premises  shall be
conducted, to the extent reasonably  practicable,  in a manner so as to minimize
disruption and/or  interference  with construction  activities or the conduct of
business on the Premises


                                   ARTICLE 13
                                   ----------

                                 INDEMNIFICATION
                                 ---------------

         Section 13.1.  Indemnification of Landlord.

                  A. Tenant  shall  indemnify  and save  Landlord and all of its
directors, officers, employees, shareholders, agents or other persons liable by,
through or under  Landlord  harmless  from and against any and all  liabilities,
suits,  obligations,  fines,  damages,  penalties,  claims,  costs,  charges and
expenses,  including  property  damage,  personal  injury and wrongful death and
further  including,  without  limitation,  architects'  and attorneys'  fees and
disbursements,  which may be imposed  upon or incurred  by or  asserted  against
Landlord  or any such  indemnified  Person  by  reason  of any of the  following
occurring  during the Lease Term or at any time when Tenant or any  Subtenant is
in  possession  of the  Premises or any portion  thereof,  unless  caused by any
breach by  Landlord  of its  obligations  under this  Lease or by the  negligent
actions or willful misconduct of Landlord, its agents, servants,  contractors or
employees:
                                       27
<PAGE>
                           (1)  construction  of the Buildings or Landscaping or
any other work or thing done in, on or about the  Premises or any part  thereof,
by Tenant or its agents or any  contractor  employed by it or any work performed
by or for  Landlord  pursuant  to  Article  7  hereof  and  any  other  work  or
construction required under this Lease,  including activities related to the bid
process therefor;

                           (2)  any  use,   non-use,   possession,   occupation,
alteration,  repair,  condition,  operation,  maintenance  or  management of the
Premises  or any  improvements  thereon  at any  time  or any  nuisance  made or
suffered  thereon or any failure by Tenant to keep the Premises or  improvements
or any part thereof in a safe condition;

                           (3)  any  acts  or  omissions  of the  Tenant  or any
Subtenant  or any of its or  their  respective  agents,  contractors,  servants,
employees or licensees;

                           (4) any fire,  accident,  injury (including death) or
damage to any  person or  property  occurring  in, on or about the  Premises  or
improvements or any part thereof;

                           (5) any lien or claim  which may be  alleged  to have
arisen against or on the Premises or  improvements or any part thereof or any of
the assets of, or funds  appropriated to, Landlord or any liability which may be
asserted  against  Landlord with respect thereto to the extent arising,  in each
such case,  out of the acts or omissions  of Tenant,  its  contractors,  agents,
servants, guests, employees, licensees, invitees or Subtenants;

                           (6) any  failure  on the  part  of  Tenant  to  keep,
observe,  comply  with and  perform  any of the  terms,  covenants,  agreements,
provisions,  conditions  or  limitations  contained  in any  Subleases  or other
contracts  and  agreements  affecting the Premises or  improvements  or any part
thereof on Tenant's part to be kept, observed or performed; and

                           (7)  any   Imposition  or  tax,   including  any  tax
attributable to the execution, delivery or recording of this Lease or payment of
Rent or other sums hereunder with respect to events occurring during the Term of
this Lease, except for any tax imposed on the net income of Landlord or excluded
from the definition of Impositions under Section 4.1.C above.

         The  provisions  of this  indemnity  shall  survive the  expiration  or
earlier  termination  of this Lease for any reason.  However,  the provisions of
this indemnity  shall apply to Tenant only with respect to  liabilities,  suits,
obligations,  fines,  damages,  penalties,  claims, costs, charges and expenses,
arising out of or  relating to events  occurring  prior to the  occurrence  of a
Permitted  Assignment  as defined in Section 17.1 and the receipt by Landlord of
the  Permitted  Assignee's  covenant of  assumption as provided in Section 17.5;
thereafter,  the Permitted  Assignee  shall have the indemnity  obligations  for
events  occurring  from  and  after  its  assumption  of  Tenant's   obligations
hereunder.
                                       28
<PAGE>
                  B. Tenant will hold all goods, materials, furniture, fixtures,
equipment,   machinery  and  other  property  whatsoever  on  the  Premises  and
improvements at the sole risk of Tenant and save the Landlord  harmless from any
loss or damage thereto by any cause  whatsoever,  except to the extent caused by
the grossly  negligent  actions or willful  misconduct of Landlord,  its agents,
servants, contractors or employees.

                  C. The  obligations  of Tenant under this Section shall not in
any way be affected by the absence in any case of covering  insurance  or by the
failure or refusal of any  insurance  carrier to perform any  obligation  on its
part to be performed under insurance policies affecting the Premises.

                  D. If any  claim,  action  or  proceeding  is made or  brought
against Landlord or its directors, officers, employees,  shareholders, agents or
other Persons  claiming by, through or under Landlord by reason of any event for
which  Tenant is liable  under this  Article,  then,  upon  demand by  Landlord,
Tenant, at its sole cost and expense,  shall resist or defend such claim, action
or proceeding in Landlord's  name, if necessary,  by such  attorneys as Landlord
shall  reasonably  approve,  which may be the attorneys  for Tenant's  insurance
carrier, if such claim,  action or proceeding is covered by insurance.  Landlord
agrees that Tenant  shall have the right to contest the  validity of any and all
claims and defend,  settle and compromise any and all such claims of any kind or
character or by whomsoever claimed, in the name of Landlord,  as Tenant may deem
necessary,  provided  that the  expenses  thereof  shall be paid by Tenant,  and
further provided that Landlord shall be fully indemnified.

         Section 13.2.  Indemnification of Tenant.

                  A.  Landlord  shall  indemnify  and save Tenant and all of its
directors, officers, employees, shareholders, agents or other persons liable by,
through or under  Tenant  harmless  from and  against  any and all  liabilities,
suits,  obligations,  fines,  damages,  penalties,  claims,  costs,  charges and
expenses,  including  property  damage,  personal  injury and wrongful death and
further  including,  without  limitation,  architects'  and attorneys'  fees and
disbursements,  which may be imposed  upon or incurred  by or  asserted  against
Tenant or any such indemnified Person by reason of the negligence,  recklessness
or willful misconduct of Landlord, its agents, servants, contractors,  employees
or licensees or caused by any breach by Landlord of its  obligations  under this
Lease.

                  B. If any  claim,  action  or  proceeding  is made or  brought
against Tenant or its directors,  officers, employees,  shareholders,  agents or
other  Persons  claiming by,  through or under Tenant by reason of any event for
which  Landlord  is liable  under this  Article,  then,  upon  demand by Tenant,
Landlord,  at its sole cost and  expense,  shall  resist or defend  such  claim,
action or proceeding in Tenant's name, if necessary, by such attorneys as Tenant
shall reasonably  approve,  which may be the attorneys for Landlord's  insurance
                                       29
<PAGE>
carrier,  if such claim,  action or proceeding  is covered by insurance.  Tenant
agrees that Landlord shall have the right to contest the validity of any and all
claims and defend,  settle and compromise any and all such claims of any kind or
character or by whomsoever  claimed, in the name of Tenant, as Landlord may deem
necessary,  provided that the expenses  thereof  shall be paid by Landlord,  and
further provided that Tenant shall be fully indemnified.


                                   ARTICLE 14
                                   ----------

                              DAMAGE OR DESTRUCTION
                              ---------------------

         Section 14.1. Tenant's Election to Restore,  Rebuild or Raze. If at any
time during the Lease Term the  Premises or any  improvements  thereon  shall be
damaged or destroyed in whole or in part by fire or other occurrence of any kind
or nature,  ordinary or  extraordinary,  foreseen or  unforeseen,  Tenant  shall
restore,  rebuild,  raze or otherwise  secure the  Premises in a neat,  safe and
sightly   condition,   in  compliance  with  any  Legal   Requirements  and  the
requirements  of any  Declaration.  All proceeds from the insurance  procured by
Tenant pursuant to Article 5 that are released or paid on account of such damage
or destruction shall belong to Tenant. Any restoration or rebuilding  undertaken
by Tenant shall comply with all requirements of Articles 10 and 11 pertaining to
the construction of the Buildings and Landscaping as if such provisions were set
forth in full herein.

         Section 14.2. Lease Obligations  Continue.  In no event shall Tenant be
entitled to any  abatement,  allowance,  reduction or suspension of rent because
part or all of the  Premises  shall be  untenable  due to the  partial  or total
destruction  thereof.  No such damage or destruction shall affect in any way the
obligation of Tenant to pay the Minimum Rent,  Additional Rent and other charges
herein  reserved  or  required  to be  paid or  release  Tenant  of or from  any
obligations imposed upon Tenant hereunder.

         Section 14.3. Election to Terminate.  Notwithstanding Sections 14.1 and
14.2 above,  if the  Buildings or any parts  thereof are damaged or destroyed by
fire or other casualty at any time during the Lease Term:

                  A. Tenant's Elections.  Tenant may elect to rebuild,  restore,
raze or  otherwise  secure the  Premises as set forth in Section  14.1 above and
keep this Lease in effect;  or Tenant may elect to  terminate  this Lease  after
such damage or destruction in accordance with the following: If Tenant elects to
terminate, it will give Landlord written notice of its intention to so terminate
within  ninety (90) days after the  occurrence  of such  damage or  destruction.
Landlord shall,  within thirty (30)  additional  days after  receiving  Tenant's
notice,  inform  Tenant in  writing  that  Landlord  either  will (a) accept the
surrender of the  Premises in its damaged  condition,  or (b) require  Tenant to
completely  raze and clear 
                                       30
<PAGE>
the property within the next sixty (60) days. In the latter event,  Tenant shall
completely  raze and clear the  property  in a  commercially  reasonable  manner
within said sixty-day (60) period.  Upon either (i) Landlord's  written election
to accept the  surrender of the Premises in its damaged  condition,  or (ii) the
completion  of the  razing  and  clearing  of the  property,  this  Lease  shall
terminate  and all of  Tenant's  obligations  hereunder  shall  cease  with  the
exception of any provisions  hereto which  expressly  survive the termination of
this Lease.

                  B. Adjustment of Additional  Rent. Upon Landlord's  acceptance
of the surrender of the Premises in its damaged  condition or the  completion of
the razing and  clearing of the  property as  provided in  subparagraph  A, this
Lease shall cease and  terminate  on the date of such  completion  with the same
force  and  effect  as if such  date  were the  date  originally  fixed  for the
termination  hereof.  With  respect  to any items of  Additional  Rent which are
payable to Landlord in the event of such  termination  or which have accrued but
are not yet payable at the date of  termination,  but which are not then capable
of ascertainment,  Tenant shall pay to Landlord an amount reasonably computed by
Landlord,  who will hold such payment as trust funds until such  Additional Rent
becomes determined. Upon determination of the Additional Rent due, if there is a
surplus in such trust  account,  Landlord  will  promptly  refund the surplus to
Tenant.  If there is a deficit in such  account,  Tenant will  promptly  pay the
amount of such deficit to Landlord.  If as a result of any action or  proceeding
to obtain a reduction of Impositions,  Tenant shall be entitled to a refund, the
amount  of such  refund  (less  the cost and  expense  of  collection  including
reasonable attorneys' fees) when collected by Landlord shall be paid by Landlord
to Tenant,  unless there  remains at the time a deficit in the trust  account or
unless  Tenant  shall be  otherwise  in  default  under  the terms  hereof.  The
covenants and  agreements  with respect to the  adjustment  and payment of these
items of Additional Rent shall survive the termination hereof.


                                   ARTICLE 15
                                   ----------

                                  CONDEMNATION
                                  ------------

         Section 15.1. Total or Substantial  Takings.  If at any time during the
term of this  Lease,  title to the whole or  substantially  all of the  Premises
shall be taken in condemnation  proceedings or by any right of eminent domain or
by  agreement  in lieu of such  proceedings,  or a  substantial  portion  of the
Premises are so taken and the remainder of the Premises  cannot feasibly be used
or  converted  for use by Tenant for the uses set forth in Section  8.2  hereof,
this Lease shall  terminate  on the date of such taking and the Minimum Rent and
Additional Rent provided for herein shall be apportioned and paid to the date of
such taking.  In the event of the  termination  of this Lease as a result of any
such taking, each of Landlord and Tenant shall be entitled to make and pursue or
to settle, compromise and adjust and to receive any award or proceeds payable on
account of its own separate  claim 
                                       31
<PAGE>
for the value of the rights and  interests  so taken as if this Lease would have
remained in effect for the full Lease Term but for such taking.

         Section  15.2.  Partial  Taking.  In the  event  that  title  to or any
interest in the Premises shall be taken in condemnation  proceedings or by right
of  eminent  domain or by  agreement  in lieu  thereof,  and such  taking is not
subject to Section 15.1 hereof, the following provisions shall apply:

                  A.  Awards.  Each of Landlord  and Tenant shall be entitled to
make and pursue or to settle,  compromise  and adjust its own separate claim for
the value of the  rights  and  interests  so taken as if this  Lease  would have
remained in effect as to the portion of the property so taken for the full Lease
Term but for such  taking.  Landlord  shall be  entitled  to retain  any  amount
awarded for the taking of any right,  title or interest of Landlord  free of any
right or claim of Tenant or any Mortgage. Tenant shall be entitled to retain any
amount  awarded  for the  taking  of any  right,  title or  interest  of  Tenant
hereunder,  subject to the  provisions of this Section and subject to the rights
of any Mortgagees.

                  B.  Tenant's  Elections.  In the  event of a  partial  taking,
Tenant shall have the same  elections as provided in Section 14.1 in the case of
damage or  destruction,  In the event of a partial taking  occurring  during the
last five (5) years of the Lease Term, Tenant shall have the elections set forth
in Section 14.3.

                  C. Lease Obligations Continue. Unless this Lease is terminated
pursuant to the  provisions  of this  Article 15,  Tenant shall be entitled to a
reduction in the Minimum Rent based upon the percentage  that the square footage
of land lost because of a partial  taking  bears to the total square  footage of
land in the Premises  prior to such  partial  taking;  however,  no such partial
taking shall  otherwise  affect in any way the  obligation  of Tenant to pay the
Additional Rent applicable to the remaining portion of the Premises or the other
charges herein  reserved or required to be paid or release Tenant of or from any
other obligations imposed upon Tenant hereunder.

         Section  15.3.  Rights of  Participation.  Each of Landlord  and Tenant
shall  have  the  right,  at its own  expense,  to  appear  in any  condemnation
proceeding and participate in any and all hearings, trials and appeals therein.

         Section 15.4.  Notice of Proceeding.  In the event that either Landlord
or  Tenant  shall  receive  notice  of  any  proposed  or  pending  condemnation
proceedings affecting the Premises or any part thereof, the party receiving such
notice  shall  promptly  notify  the other  party of such  notice  and  contents
thereof.
                                       32
<PAGE>
                                   ARTICLE 16
                                   ----------

                            SUBTENANT NON-DISTURBANCE
                            -------------------------

         Section 16.1.  Agreement for  Non-Disturbance  of Subtenants.  Landlord
hereby  covenants  and agrees,  for the benefit of any  Subtenant,  that, in the
event that this Lease  shall for any  reason  terminate  prior to the end of the
Lease Term,  Landlord  shall  attorn to and shall  recognize  the rights of each
Subtenant  under its Sublease as if the Landlord were the sublessor  thereunder,
subject to the following terms and conditions:  (a) such Sublease is a Permitted
Sublease;  (b) such Subtenant has previously  provided Landlord with its current
notice  address;  (c) at the time of the  termination of this Lease,  no default
exists (after the  expiration of any  applicable  notice and cure periods) under
such Sublease  which would then permit the landlord  thereunder to terminate the
same or to exercise any default  remedy  provided for therein;  and (d) Landlord
shall  deliver to the Subtenant (at the notice  address  previously  provided by
Subtenant to Landlord)  within thirty (30) days  following  termination  of this
Lease an instrument  which the Subtenant  shall execute within fifteen (15) days
after such  delivery,  confirming  the agreement of such  Subtenant to attorn to
Landlord and to pay all rent and other sums payable under such Sublease directly
to Landlord and to recognize  Landlord as such  Subtenant's  landlord  under its
Sublease,  which  instrument shall also provide that neither Landlord nor any of
its officers,  employees,  agents or other Persons  responsible  by,  through or
under Landlord shall be:

                  A.  Liable  for  any act or  omission  of any  prior  landlord
(including, without limitation, the then defaulting landlord), or

                  B. Subject to any offsets or defenses  which the Subtenant may
have  against  any  prior  landlord  (including,  without  limitation,  the then
defaulting landlord), or

                  C. Bound by any payment of rent which the Subtenant might have
paid for more than the current month to any prior landlord  (including,  without
limitation, the then defaulting landlord), or

                  D.  Bound  by  any  covenant  to  undertake  or  complete  any
construction of the Premises or any portion thereof demised by said Sublease, or

                  E.  Bound  by  any  obligation  to  make  any  payment  to the
Subtenant, or

                  F. Bound by any  modification of the Sublease made without the
written consent of Landlord.

         Notwithstanding  that  Landlord  shall  not be  liable  for  any act or
omission of any prior landlord, nor subject to any offsets or any defenses which
Subtenant may have against any prior landlord, and notwithstanding that Landlord
shall not have any  obligation  to  construct  
                                       33
<PAGE>
or complete any portion of the Premises,  Subtenant  shall have the right to set
off against the rent otherwise payable to Landlord under the Permitted  Sublease
(subject to the  limitation on setoff set forth below) the amounts  necessary to
reimburse  Subtenant for any amounts  actually and  reasonably  expended and any
costs and expenses  actually and  reasonably  incurred by Subtenant (but not for
lost profits or consequential  damages incurred by Subtenant) as a result of any
breach or default  under the Permitted  Sublease by any landlord,  including any
continuing  default  and  including  any  failure of the  Landlord  or any prior
landlord to construct, complete, service, maintain or repair any improvements on
the Premises if and as provided in such Permitted Sublease;  provided,  however,
that the  amount  of rent to be paid to  Landlord  each  month by the  Subtenant
without  setoff  shall equal or exceed the monthly  rent  payable for that month
under this Lease.


                                   ARTICLE 17
                                   ----------

                        ASSIGNMENT, SUBLETTING, MORTGAGE
                        --------------------------------

         Section 17.1. Prior Consent; Permitted Assignments.  Tenant may assign,
mortgage, pledge, encumber,  sublease or transfer this Lease or any part thereof
or interest  therein,  with or without the prior written  consent of Landlord in
each  instance,  provided no such action shall release  Tenant of its continuing
obligations   hereunder  unless  it  meets  the  requirements  of  a  "Permitted
Assignment"  as  hereinafter  defined,  and  further  provided  that a Permitted
Assignment  which is also the Initial  Assignment  shall not in any event act to
release  the  Tenant  named in the first  paragraph  of this Lease of any of the
Tenant's obligations or liabilities under this Lease.

                  A.  A  "Permitted   Assignment"   shall  be  (i)  the  Initial
Assignment  described in Section 17.17 below,  and (ii) any other  assignment of
Tenant's interest in this Lease which meets the following requirements:

                           (1) The  assignment  shall  be an  assignment  of the
entire  interest  of  Tenant  for  the  remainder  of the  Term,  and a  partial
assignment shall not be permitted.

                           (2) Prior to such  assignment  the proposed  assignee
shall  submit  to  Landlord  a  financial  statement  together  with  reasonable
supporting  documentation  (but not including new appraisals)  establishing that
such  proposed  assignee,  either by itself or in  combination  with a guarantor
willing to guaranty such proposed assignee's  obligations under this Lease, will
have at the time of the  assignment  a net worth  (defined  as the then  current
market value of its assets less its  liabilities)  at least equal to the greater
of (i)  $4,000,000  in 1993  dollars  adjusted  by the CPI index  referred to in
Article 5 for inflation to the time of the proposed assignment, or (ii) the then
current fair market value of Premises  (including the real  property,  Buildings
and Landscaping,  if any) as if held in fee simple and in single ownership.  The
fair market value of the Premises  shall be  established  either  through mutual
                                       34
<PAGE>
agreement between Landlord and Tenant, or, if they cannot agree upon a value, by
appraisal  conducted  by  an  MAI  appraiser   experienced  in  valuing  similar
properties, with the expense of such appraisal being borne by Tenant.

                           (3) The proposed assignee's occupation and use of the
Premises will not violate Section 8.2 hereof.

                           (4)  The  proposed  assignee's   occupancy  will  not
require a variation in the terms of this Lease.

                           (5)  Landlord  is  provided   with  an  Interim  Site
Assessment indicating no adverse environmental  condition in, on, under or about
the Premises caused by Tenant or anyone claiming by, through or under Tenant.

                  B. Notwithstanding the foregoing requirements,  so long as the
Premises  or any  portion  thereof  are owned by or under  lease to Papago  Park
Center, Inc., Salt River Project Agricultural Improvement and Power District, or
any affiliate or subsidiary thereof, Tenant may request Landlord's consent to an
assignment which does not meet all of the foregoing  requirements,  and any such
assignment  with the consent of Landlord  shall also be  considered a "Permitted
Assignment."  Further,  in the event  and at such time that none of Papago  Park
Center, Inc., Salt River Project Agricultural Improvement and Power District, or
any affiliate or subsidiary  thereof have any ownership  interest  (leasehold or
otherwise)  in the  Premises,  Tenant  shall have the right to assign its entire
interest under this Lease without meeting the  requirements  set forth above and
without obtaining the then Landlord's consent, and such assignment shall also be
considered a "Permitted Assignment."

                  C. An assignment  which meets  requirements  of subpart A or B
above is  herein  called  a  "Permitted  Assignment"  and the  assignee  under a
Permitted  Assignment  is  herein  called  a  "Permitted  Assignee".   Upon  the
occurrence of a Permitted  Assignment and the Permitted  Assignee's  delivery to
Landlord of the  assumption  instrument  referred to in Section 17.5 below,  the
prior  Tenant  (except as  otherwise  provided in Section  17.17 below) shall be
released from liabilities and obligations under this Lease accruing  thereafter,
and the Permitted Assignee shall be and become and remain liable for the payment
of all rents and other sums payable hereunder and for the due performance of all
the covenants,  agreements,  terms and provisions  hereof on Tenant's part to be
performed  throughout  the  remainder  of the  Lease  Term,  from and  after the
Permitted Assignment.  The provisions hereof shall be operative for and apply to
each subsequent Permitted Assignment.

         Section 17.2. Permitted Subleases.  Tenant may sublease portions of the
Premises with or without the prior consent of Landlord.  However,  the Subtenant
under  any  Sublease  made  without   Landlord's  consent  shall  not  have  the
protections  of Article 16 and  Landlord  shall not be required to  recognize or
attorn to such Subtenant,  unless such Sublease meets the following requirements
for a "Permitted Sublease":
                                       35
<PAGE>
                  A. Such  Sublease  shall be subject  and  subordinate  to this
Lease and the  rights of  Landlord  hereunder  and the  rights of any  Permitted
Mortgagee, as provided herein.

                  B. Such Sublease shall provide that, in the event the Lease is
terminated,  the  Subtenant  will  attorn to  Landlord as provided in Article 16
hereof.

                  C. Such Sublease shall contain a provision to the effect that,
in the event  this  Lease is  terminated  and all of the  Buildings  within  the
Premises are not operating at a total  occupancy level of at least forty percent
(40%) or Landlord is not then receiving  rents under all of the Subleases  which
result in Landlord  realizing  the net amount of the Minimum Rent then due under
this Lease after considering all expenses of holding, operating and managing the
Buildings,  then  notwithstanding  any  agreement  on the  part of  Landlord  to
recognize such Sublease, Landlord shall have the right to terminate the Sublease
at any time after the first nine (9) years under the Sublease upon the giving of
one (1) year's prior notice and Landlord's making  termination  payment equal to
the annual Sublease rent then in effect upon such termination.

                  D. Such  Sublease  shall  require the payment of minimum  rent
thereunder  which  will  represent  throughout  the  term  of  such  Sublease  a
reasonable  share of the Minimum  Rent payable  hereunder  based on the Building
square  footage  leased by the subtenant  relative to the square  footage all of
Buildings within the Premises.

                  E. Such  Sublease  is  otherwise  entered  into upon terms and
conditions  which are reasonably  satisfactory  to Landlord.  Tenant may satisfy
this  condition E by obtaining  Landlord's  prior approval of a standard form of
Sublease and using such form without substantial deviation.

                  F. Notwithstanding  anything to the contrary contained in this
Lease,  provided it conforms with the form  previously  reviewed and approved by
Landlord,  when  executed  the City  Lease  shall  be  approved  as a  Permitted
Sublease.

         Section 17.3. Rent From Assignee. If this Lease is assigned, whether or
not in violation of the provisions hereof,  Landlord may and hereby is empowered
to collect rent directly from the  assignee.  In such event,  Landlord may apply
the net amount received by it to the rent and other sums payable  hereunder.  No
such  collection  shall be  deemed a waiver  of the  covenant  herein  regarding
assignment  or an  acceptance  of the assignee as a Tenant under this Lease or a
release of Tenant from the further performance of the covenants herein contained
on the part of Tenant.

         Section 17.4.  Continuing  Liability.  Except as provided herein in the
case of a Permitted Assignment, the making of any assignment in whole or in part
without Landlord's prior reasonable consent, shall not operate to relieve Tenant
from its obligations under this Lease and,  notwithstanding any such assignment,
Tenant  shall  remain  liable for the payment 
                                       36
<PAGE>
of all rent and other sums payable  hereunder and for the due performance of all
the covenants,  agreements,  terms and  provisions of this Lease  throughout the
Lease Term. However,  in the event of a Permitted  Assignment of all of Tenant's
rights  and  obligations  under this Lease to a  Permitted  Assignee,  upon such
Permitted Assignee's delivery to Landlord of the assumption  instrument referred
to be in  Section  17.5  below,  Tenant  thereafter  shall  only be  liable  for
obligations  arising prior to such assignment,  and the Permitted Assignee shall
be liable for all obligations  arising from and after such assignment,  provided
such Permitted  Assignee has executed an instrument  expressly assuming all such
obligations, as provided in Section 17.5 below.

         Section  17.5.  Assignee  Bound.  Subject to the  provisions of Section
17.1.C above, every assignee, whether as assignee or as successor in interest of
any  assignee  of Tenant  herein  named,  or as  successor  in  interest  of any
assignee,  including  any  purchaser  of the Lease  under a  foreclosure  of any
Permitted Mortgage, shall be and become and remain liable for the payment of all
rent and other sums payable  hereunder  and for the due  performance  of all the
covenants,  agreements,  terms  and  provisions  hereof on  Tenant's  part to be
performed  throughout  the  Lease  Term,  and  every  provision  of  this  Lease
applicable  to Tenant shall apply to and bind every such  assignee and purchaser
with the same force and effect as though  such  assignee or  purchaser  were the
Tenant named in this Lease.  No transfer to such  assignee or to such  purchaser
shall be binding  upon  Landlord or act to release any  assignor or prior Tenant
unless such  assignee or  purchaser  shall  deliver to the Landlord a recordable
instrument which contains a covenant of assumption by said assignee or purchaser
to such  effect,  but the failure or refusal of such  assignee or  purchaser  to
deliver  such  instrument  shall not  release  or  discharge  such  assignee  or
purchaser from its obligations and liability as above set forth.

         Section  17.6.  Consent  Limited.   Any  consent  by  Landlord  to  any
assignment or Sublease  shall apply only to the specific  transaction  approved.
Such  consent  shall not be  construed  as a waiver of the duty of Tenant or its
successors  or  assigns  to obtain  from the  Landlord a consent to any other or
subsequent  assignment  or Sublease,  if  applicable,  or as a  modification  or
limitation of the right of Landlord with respect to the foregoing covenant.

         Section 17.7. Permitted Mortgages--Definition. Tenant from time to time
during  the  Term of this  Lease  may make one or more  Permitted  Mortgages.  A
"Permitted Mortgage" shall mean a Mortgage in which the following conditions are
satisfied:

                  A. Such Permitted  Mortgage shall encumber no interests in the
Premises  other than Tenant's  interest  therein  (including the Option) and any
Subleases;

                  B.  Tenant or the  holder  of such  Permitted  Mortgage  shall
promptly  deliver to Landlord in the manner  herein  provided  for the giving of
notices a true copy of the Permitted Mortgage and of any assignments thereof and
shall  provide  Landlord with the current  notice  address of the holder of such
Permitted Mortgage; and
                                       37
<PAGE>
                  C. The  holder  of such  Permitted  Mortgage  shall  expressly
accept  and agree for itself  and its  successors  and  assigns,  including  any
purchaser at any foreclosure sale, to be bound by the provisions of Section 17.5
hereof,  but only for the  period  of time  that the  holder  of such  Permitted
Mortgage is the Subtenant under the Sublease.

         Section 17.8. Permitted  Mortgages--Further  Provisions.  The following
provisions shall apply to any Permitted Mortgage:

                  A. For purposes of the notice  requirements  of this  Article,
the term  "Permitted  Mortgagee"  shall mean only the  holder of an  outstanding
Permitted  Mortgage  recorded in the office of the Maricopa  County Recorder who
has provided Landlord with a current address for the delivery of notices (herein
sometimes called a "Permitted Mortgagee of Record").  Further, Landlord may rely
upon the certificate of any title insurance company authorized to do business in
the State of Arizona in order to determine which Permitted Mortgage is first and
prior to all others  recorded  in the office of said  Maricopa  County  Recorder
(herein sometimes called the "First Permitted Mortgage of Record").

                  B. For the purpose of this Article,  the making of a Permitted
Mortgage  shall not be deemed to  constitute  an  assignment or transfer of this
Lease,  nor shall any  holder of a  Permitted  Mortgage,  as such,  be deemed an
assignee or transferee of this Lease or of the leasehold  estate hereby  created
so as to require such holder of a Permitted  Mortgage to assume the  performance
of any of the  terms,  covenants  or  conditions  on the  part of  Tenant  to be
performed  hereunder;  but  the  purchaser  at any  sale of  this  Lease  in any
proceedings  for the foreclosure of any Permitted  Mortgage,  or the assignee or
transferee of this Lease under any  instrument of assignment or transfer in lieu
of the  foreclosure  of any Permitted  Mortgage  (including any such holder of a
Permitted Mortgage, if it becomes such a purchaser or assignee), shall be deemed
to be an assignee or transferee  within the meaning of this Section and shall be
deemed  to have  assumed  the  performance  of all  the  terms,  covenants,  and
conditions  on the part of Tenant to be performed  hereunder,  but only from and
after the date of such  purchase and  assignment.  In no event shall a Permitted
Mortgagee (or any purchaser at a foreclosure  sale) be liable or responsible for
or be deemed to have assumed liability or be obligated to indemnify Landlord for
any prior actions,  omissions,  defaults,  breaches or other events caused by or
related to any prior tenant (including Tenant) and such Permitted  Mortgagee (or
any  purchaser  at a  foreclosure  sale)  shall  only be  responsible  for acts,
omissions,  defaults, breaches or events occurring from and after it becomes the
Tenant,  but the prior  Tenant(s) shall not be released from liability for prior
occurrences  for  which  any such  Tenant(s)  may be liable  under  this  Lease.
Notwithstanding the foregoing, upon the Permitted Mortgagee (or any purchaser at
a foreclosure sale) becoming the Tenant hereunder,  such Permitted Mortgagee (or
purchaser at a foreclosure sale) shall be responsible to cure any defaults which
may then exist which are reasonably  susceptible to cure, in accordance with the
provisions of Section 17.11 below.
                                       38
<PAGE>
                  C.  Notwithstanding  the  provisions  of  Article  15  to  the
contrary,  any  award or other  proceeds  of or from a  taking  in  condemnation
proceedings  or by any right of eminent  domain or by  agreement in lieu of such
proceedings,  relating to the Buildings and Landscaping or any portion  thereof,
shall first be utilized to pay off and discharge all Permitted  Mortgages  (with
such award or proceeds to first be utilized to pay off and  discharge  the First
Permitted  Mortgage of Record and  thereafter,  in order of lien priority of the
Permitted  Mortgages)  before  either  Landlord  or Tenant  shall have rights or
claims thereto under Article 15 below or otherwise.

         Section 17.9. Notice to Permitted Mortgagees.  So long as any Permitted
Mortgage shall remain a lien on Tenant's  leasehold estate  hereunder,  Landlord
agrees, simultaneously with the giving of any notice to Tenant (i) of default or
(ii) of  termination  hereof or (iii) of any  matter  on which a default  may be
predicated or claimed or (iv) of any condition  which if continued may lead to a
default or termination  hereof or the exercise of any other remedies  hereunder,
to give  duplicate  copies thereof or of any process in any action or proceeding
brought to  terminate  or to  otherwise  in any way affect this  Lease,  to each
Permitted  Mortgagee of Record, and no such notice to Tenant or process shall be
effective  against  the  holder of a  Permitted  Mortgage  unless a copy of such
notice is given to such  Permitted  Mortgagee  in the  manner  herein  provided.
Concurrently with Tenant,  the holder of a Permitted Mortgage will have the same
period,  if any, after receipt of the aforesaid  notice to remedy the default or
cause the same to be remedied plus twenty (20) additional days  thereafter,  and
Landlord agrees to accept  performance by the holder of a Permitted  Mortgage as
though  the same had been  done or  performed  by  Tenant.  Notwithstanding  the
foregoing,  if Landlord elects to obtain insurance  pursuant to Section 5.7, the
additional  grace  period for  Permitted  Mortgagees  set forth  above  shall be
reduced from twenty (20) days to ten (10) days.

         Section  17.10.  Right to Cure.  Any  provision  hereof to the contrary
notwithstanding, Landlord will not terminate this Lease by reason of any default
without  first giving to each  Permitted  Mortgagee a period of ninety (90) days
after  the  occurrence  of such a  default  within  which  either  (i) to obtain
possession of the Premises  (including  possession by a receiver) and thereafter
to cure such default,  or (ii) to commence  foreclosure  proceedings in order to
acquire  Tenant's  interest under this Lease and thereafter  prosecutes the same
with diligence and without  unreasonable delay or substantial  interruption.  If
the holder of a Permitted  Mortgage is prohibited from commencing or prosecuting
foreclosure  or other  appropriate  proceedings  in the  nature  thereof  by any
process  or  injunction  issued by any  court or by reason of any  action by any
court having jurisdiction of any bankruptcy or insolvency  proceeding  involving
Tenant, the ninety (90) day period set forth above for commencing or prosecuting
foreclosure  or  other  proceedings  shall be  extended  for the  period  of the
prohibition.  Nothing herein shall preclude  Landlord from  exercising any other
rights or remedies under this Lease with respect to any default by Tenant during
any period of such forbearance.  Upon a Permitted  Mortgagee of Record acquiring
title or possession of the Premises, as provided above, such Permitted Mortgagee
of Record shall thereafter 
                                       39
<PAGE>
proceed to cure any then existing  defaults under this Lease,  subject to and in
the manner set forth in Section 17.11 below.

         Section 17.11.  Conditions of Cure. The provisions of Section 17.10 are
subject to the conditions that, within forty-five (45) days after receipt of any
notice pursuant to Section 17.10, the holder of a Permitted Mortgage shall:

                  A.  Notify  Landlord  of its  election  to  proceed  with  due
diligence  promptly to acquire  possession  of the Premises or to foreclose  the
Permitted  Mortgage or otherwise to extinguish  Tenant's interest in this Lease;
and

                  B. Deliver to Landlord an  instrument in writing duly executed
and acknowledged wherein such Mortgagee agrees that:

          (1) During the period that such  Mortgagee  shall be in  possession of
the Premises and so long as it remains in  possession it will pay or cause to be
promptly  paid to  Landlord  all  Minimum  Rent  and  Impositions  that are then
currently due or that may, from time to time, become due hereunder; and

          (2) If such Mortgagee shall obtain possession of the Premises, whether
voluntarily or pursuant to any foreclosure or other proceedings,  such Mortgagee
shall, promptly following delivery of possession,  perform all the covenants and
agreements  herein  contained on Tenant's  part to be performed and also pay all
past due Minimum  Rent and  Impositions  to the extent  that  Tenant  shall have
failed to pay the same to the date of delivery of possession.

         Section  17.12.  New  Lease  with  Mortgagee.   In  the  event  of  the
termination of this Lease prior to its stated  expiration date,  Landlord agrees
that it will give the holder of the First Permitted Mortgage of Record notice of
such  termination  and will  enter  into a new lease of the  Premises  with such
Mortgagee or, at the request of such Mortgagee,  with its assignee,  designee or
nominee for the  remainder  of the Lease Term,  effective as of the date of such
termination,  upon all of the same covenants,  agreements, terms, provisions and
limitations as are herein  contained,  if and only if (i) such  Mortgagee  makes
written  request  upon  Landlord for such new lease within sixty (60) days after
the  Landlord  gives notice that this Lease has been  terminated,  and (ii) such
Mortgagee pays or causes to be paid to Landlord at the time of the execution and
delivery of such new lease any and all Minimum Rent and Impositions  which would
at the time of the  execution  and delivery  thereof be due under this Lease but
for  such  termination  and  pays or  causes  to be paid  any and all  expenses,
including  reasonable  attorneys' fees, court costs, and costs and disbursements
incurred by Landlord in connection  with any such  termination and in connection
with the execution and delivery of such new lease,  less the net income from the
Premises collected by Landlord subsequent to the date of the termination of this
Lease and prior to the execution and delivery of such new lease.  The provisions
of this Section shall survive the  
                                       40
<PAGE>
termination of this Lease and shall continue in full force and effect thereafter
to the same extent as if this Section were a separate and  independent  contract
between Landlord and the holder of the First Permitted Mortgage of Record.

         Section 17.13. Priority of New Lease.  Notwithstanding  anything to the
contrary  express or implied in this Lease,  any new lease made  pursuant to the
preceding Section shall have the same priority as this Lease with respect to any
mortgage, deed of trust, or other lien, charge, or encumbrance on the fee of the
Premises,  and any Sublease  under this Lease shall be a Sublease  under the new
lease (except to the extent the Mortgagee's foreclosure,  if any, has eliminated
such Sublease and the Mortgagee does not require or permit attornment) and shall
not be deemed to have been terminated by the termination of this Lease.

         Section  17.14.  Assignment  of  Subleases.  Tenant  hereby  assigns to
Landlord,  effective upon the occurrence of any Event of Default hereunder,  and
so long  as  such  Default  remains  uncured,  as  collateral  security  for the
performance of all obligations of Tenant under this Lease,  any Sublease created
by Tenant and each and every amendment, modification or extension thereof. In no
event shall such  assignment  impose upon  Landlord  any duty or  obligation  to
perform any of the  obligations  of Tenant as landlord  under any such Sublease,
subject to Section 17.2. After default by Tenant, Landlord may collect the rents
and  other  payments  from  any and all  Subtenants  and  apply  the net  amount
collected  to the rent and other sums  payable  hereunder,  and may  enforce the
provisions of any such Sublease directly against the Subtenant thereunder in the
name  of  Landlord  or of  Tenant  but  for  Landlord's  sole  benefit.  No such
collection  or  enforcement  by  Landlord  will be  deemed to be a waiver of any
agreement,  term,  covenant  or  condition  of this  Lease  by  Landlord  or the
acceptance by Landlord of any Subtenant. The assignment in this Section shall be
subordinate  to any assignment of rents to a Permitted  Mortgagee.  Although the
provisions   of  the   immediately   preceding   sentence  are  intended  to  be
self-operative, Landlord shall execute, have acknowledged and shall deliver such
instruments  of  subordination  respecting  said  assignment  of  rents  as  any
Permitted  Mortgagee may reasonably  require.  Once such default has been cured,
Tenant  thereafter  shall  have the  right to  collect  future  rents  and other
payments from any and all Subtenants and otherwise enforce the provisions of the
Sublease.

         Section  17.15.  Grace Period.  Unless and until  Landlord has received
notice  from the  holder of the First  Permitted  Mortgage  of Record  that such
holder  elects not to demand a new lease as provided  in Section  17.12 or until
the sixty (60) day period  therefor  has expired,  Landlord  shall not cancel or
agree to the  termination  or surrender of any existing  Subleases or enter into
any new leases or  subleases  with  respect to the  Premises  without  the prior
written consent of the holder of the First Permitted Mortgage of Record.

         Section 17.16. Modifications.  Notwithstanding anything to the contrary
contained  herein,  so long as there is any  Permitted  Mortgage  of Record,  no
consensual  act or  
                                       41
<PAGE>
agreement  between or on the part of  Landlord  or Tenant to cancel,  terminate,
surrender, or modify this Lease or Tenant's right to possession shall be binding
upon or  effective  against a Permitted  Mortgagee  of Record  without its prior
written consent.

         Section 17.17.  Initial  Assignment.  Tenant has informed Landlord that
concurrently  with (or shortly  following)  the  execution  and delivery of this
Lease,  Tenant  intends to assign  this Lease and its rights  hereunder  to R&K,
subject to and in  accordance  with the terms,  covenants  and  provisions of an
Addendum to Escrow Instructions and Agreement to Purchase and Sell Improved Real
Property  (the  "Initial  Assignment").  Throughout  the  term  of  the  Initial
Assignment, the obligations of R&K shall be guaranteed by the Chamberlain Family
Trust  dated  September  21, 1979  pursuant  to a  Guarantee  of Lease in a form
reasonably  acceptable  to  Landlord.  Notwithstanding  anything to the contrary
contained in Section 17.4,  Section 17.16,  or any other  contrary  provision of
this Lease,  the Initial  Assignment  shall not relieve the Tenant  named in the
first  paragraph of this Lease of its  agreements,  liabilities,  covenants  and
obligations  hereunder  during the period that R&K holds the  Tenant's  interest
hereunder;  provided,  however, R&K shall be released from any future obligation
or liability arising under this Lease following the acquisition of the Buildings
and Landscaping by Tenant and the re-assignment of this Lease by R&K back to the
Tenant named in the first paragraph of this Lease, it being  understood that the
reassignment  of  this  Lease  by R&K  back to the  Tenant  named  in the  first
paragraph of this Lease shall not operate to release R&K or any  guarantor  from
any obligation or liability incurred during the term of the Initial Assignment.


                                   ARTICLE 18
                                   ----------

                                DEFAULT BY TENANT
                                -----------------

         Section  18.1.  Events  of  Default.  The  happening  of any one of the
following  events  (herein  called  "Events of Default")  shall be  considered a
material breach and default by Tenant under this Lease.

         A.  Rent  Payment.  If  default  shall be made in the due and  punctual
payment  of any rent or sums  required  to be paid by  Tenant  hereunder  within
twenty (20) days after notice thereof from Landlord to Tenant; or

         B.  Continuing  Default.  If  default  shall be made by  Tenant  in the
performance  of or  compliance  with any of the  covenants,  agreements,  terms,
limitations  or conditions  hereof other than those referred to in the foregoing
subsection A, and such default  shall  continue for a period of thirty (30) days
after written notice thereof from Landlord to Tenant (provided, however, that if
Tenant  proceeds with due  diligence  during such thirty (30) day period to cure
such default and is unable by reason of the nature of the work  involved to cure
the same within such period, but such default is reasonably susceptible of 
                                       42
<PAGE>
being
cured by Tenant, such period shall be extended by the time reasonably  necessary
to cure the same, as reasonably determined by Landlord).

         Section 18.2.  Notice and  Termination.  Upon the  occurrence of one or
more of the Events of Default  listed in Section 18.1,  subject to the rights of
any Permitted  Mortgagees,  the terms and  provisions of Sections 17.7 to 17.16,
inclusive, above, and the expiration of any cure, grace or other time period set
forth herein which are conditions  precedent to Landlord's right of termination,
then Landlord at any time thereafter  unless and until such Event of Default has
been cured may give written notice ("Second  Notice") to Tenant  specifying such
Event(s) of Default and stating  that this Lease shall  expire and  terminate on
the date specified in such Second  Notice,  which shall be at least fifteen (15)
days after the giving of such Second Notice, and upon the date specified in such
Second  Notice,  subject to the  provisions  of Article  17,  this Lease and all
rights of Tenant herein under shall terminate, cease and be null and void.

         Section 18.3. No Implied Waivers. No failure by Landlord to insist upon
the strict performance of any covenant,  agreement,  term or condition hereof or
to  exercise  any  right  or  remedy  consequent  upon a breach  hereof,  and no
acceptance  of full or partial rent during the  continuance  of any such breach,
shall  constitute  a waiver of any such breach or of such  covenant,  agreement,
term or  condition.  No  covenant,  agreement,  term or  condition  hereof to be
performed or complied with by Landlord or Tenant,  and no breach thereof,  shall
be waived,  altered or modified,  except by a written instrument executed by the
party to be charged  therewith.  No waiver of any breach  shall  affect or alter
this  Lease,  but each and  every  covenant,  agreement,  term,  limitation  and
condition  hereof  shall  continue in full force and effect with  respect to any
other then existing or subsequent breach hereof.

         Section 18.4. Remedies Cumulative. In the event of any breach by Tenant
of any of the covenants,  agreements,  terms or conditions hereof,  Landlord, in
addition  to any and all other  rights,  shall be entitled to enjoin such breach
and shall  have the right to invoke  any right and  remedy  allowed at law or in
equity or by statute or otherwise  for such breach as though  re-entry,  summary
proceedings,  and other  remedies  were not provided  for in this Lease.  In the
event of  Tenant's  failure to pay rent or any other sums  within  five (5) days
after the date when due hereunder (without regard to any notice or grace periods
set forth in Section 18.1),  then Tenant shall pay Landlord interest on any such
overdue  payments and associated late charges at a per annum interest rate equal
to four  percent  (4%) over the prime  rate then  published  in the Wall  Street
Journal or a  reasonably  equivalent  rate  selected by Landlord  (e.g.,  if the
"prime rate" is 4%, the rate  hereunder  shall be 4% higher;  in other words 8%)
but in no event an amount  greater  than  permitted  by law,  in addition to any
other right or remedy of Landlord  resulting  from any such breach or default by
Tenant.

         Section 18.5. Late Charge. In the event that any payment required to be
made by Tenant to Landlord under the terms of this Lease is not received  within
five (5) days after 
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<PAGE>
the due date thereof (without regard to any notice or grace periods set forth in
Section  18.1), a late charge shall without  notice become  immediately  due and
payable  in an  amount  equal to two and  one-half  percent  (2.5%)  of the late
payment or $500.00,  whichever is greater.  The late charge shall be in addition
to the interest charges pursuant to Section 18.4.

                                   ARTICLE 19
                                   ----------

                                SAVING PROVISION
                                ----------------

         If any term or  provision  hereof  or the  application  thereof  to any
person or circumstances  shall, to any extent, be invalid or unenforceable,  the
remainder of this Lease, or the application of such term or provision to persons
or  circumstances   other  than  those  as  to  which  it  is  held  invalid  or
unenforceable, shall not be affected thereby, and each term and provision hereof
shall be valid and be enforced to the fullest extent permitted by law.


                                   ARTICLE 20
                                   ----------

                                     NOTICES
                                     -------

         Section 20.1.  Notices.  Any notice,  request,  demand,  statement,  or
consent  herein  required or  permitted to be given by either party to the other
hereunder  shall be in  writing  signed by or on behalf of the party  giving the
notice and addressed to the other at the address as set forth below:

                  Landlord                  Papago Park Center, Inc.
                                            Post Office Box 52025
                                            Phoenix, AZ  85012
                                            Attn:  Development Manager

                  Tenant                    Three-Five Systems, Inc.
                                            Attn:  Mr. Thomas Schoenbeck
                                            10230 South 50th Place
                                            Phoenix, AZ  85044

                  with a copy to:           David L. Lansky, Esq.
                                            O'Connor Cavanagh
                                            One East Camelback Road
                                            Suite 1100
                                            Phoenix, AZ  85016
                                       44
<PAGE>
         Each party may by notice in writing  change its address for the purpose
of this Lease,  which  address  shall  thereafter be used in place of the former
address. Each notice, demand, request, or communication which shall be mailed to
any of the aforesaid shall be deemed sufficiently given, served, or sent for all
purposes  hereunder  two (2)  business  days  after it shall be mailed by United
States  registered or certified  mail,  postage  prepaid,  in any post office or
branch post office regularly maintained by the United States Government.


         Section  20.2.  Notice to Permitted  Mortgagees  of Record Only.  When,
under the terms of this Lease,  any notice is required or  permitted to be given
to a Permitted  Mortgagee,  it is the  intention of the parties that such notice
shall be required to be given only to Permitted  Mortgagee(s) of Record who have
provided Landlord with a current notice address. This provision takes precedence
over any other  provisions  of this  Lease that  might  impose a greater  notice
requirement upon Landlord.


                                   ARTICLE 21
                                   ----------

                                 QUIET ENJOYMENT
                                 ---------------

         Section 21.1. Quiet Enjoyment. Subject to all of the conditions, terms,
and provisions  contained in this Lease,  Landlord  covenants that Tenant,  upon
paying the rent and other sums when due  hereunder and observing and keeping all
terms, covenants,  agreements,  limitations and conditions hereof on the part of
Tenant  to be kept,  shall  have and may  quietly  enjoy the  possession  of the
Premises during the term hereof,  without  hindrance or molestation by Landlord,
and Landlord shall not  affirmatively  authorize any hindrance or molestation of
Tenant by others.


                                   ARTICLE 22
                                   ----------

                                    ESTOPPEL
                                    --------


         Section 22.1. Estoppel Certificates.  Landlord may request of Tenant or
any Subtenant,  and Tenant may request of Landlord, at any time and from time to
time a certificate addressed to Landlord or Tenant, as applicable, or any Person
designated  by  Landlord or Tenant,  as  applicable,  as having any  interest or
proposed interest in the Premises or any portion thereof evidencing whether:

         A. The Lease is in full force and effect;

         B. The  Lease  has not been  modified  or  amended  in any  respect  or
describing such modifications or amendments, if any;
                                       45
<PAGE>
         C. There are no existing  defaults  under the Lease to the knowledge of
the party  executing the  certificate or specifying the nature of such defaults,
if any; and

         D. Such other factual matters  pertaining to the Lease and the Premises
as may be reasonably requested.

Any such  requested  certificate  shall be  delivered,  without  charge,  to the
requesting  party within  fourteen  (14) days after the request has been made in
writing.


                                   ARTICLE 23
                                   ----------

                                    CONSENTS
                                    --------

         Section  23.1.  Parties and Notice.  Whenever  any  consent,  approval,
election or similar action is required  under this Lease,  the same shall not be
effective  unless it is in writing  and  delivered  to all parties in the manner
hereinabove provided for the giving of notices.

         Section 23.2. No  Unreasonable  Withholding or Delay.  Wherever in this
Lease the consent or approval of any party is required, such consent or approval
shall  not  be  unreasonably  withheld  nor  delayed,   except  where  otherwise
specifically provided.


                                   ARTICLE 24
                                   ----------

                              ADJOINING EXCAVATION
                              --------------------

         Section  24.1.  Entry and  Repairs.  Tenant  shall  allow  any  person,
municipality  or agency  authorized by law and desiring to excavate upon land or
streets  adjacent to the  Premises to enter the  Premises and shore up any walls
during such  excavation to the extent  required.  Tenant shall,  at Tenant's own
expense,  repair or cause to be repaired,  any damage  caused to any part of the
Premises because of any excavation, construction work or other work of a similar
nature which may be done on any property or street  adjoining or adjacent to the
Premises, and Landlord hereby assigns to Tenant any and all rights to sue for or
recover  against any  parties  causing  such  damages,  the amounts  expended or
incurred by Tenant because of the provisions  hereof  requiring Tenant to repair
any damages sustained by such excavation work or other work.
                                       46
<PAGE>
                                   ARTICLE 25
                                   ----------

                             LIMITATION ON RECOURSE
                             ----------------------

         In the event of a  material  breach and  default  by Tenant  under this
Lease, after Landlord regains  possession of the Premises,  Tenant shall have no
personal  liability for the payment of future Minimum Rent or Additional Rent or
other  obligations  accruing after Landlord regains  possession of the Premises.
The foregoing  limitation on Landlord's recourse shall not apply,  however,  and
Tenant shall have full, personal and continuing liability, for:

         (1)      Claims  arising out of failure prior to Tenant's  surrender of
                  the Premises to pay Impositions,  taxes, assessments, labor or
                  material  charges,  or other  charges  that can  create  liens
                  against the Premises;

         (2)      Claims  arising  out of waste of the  Premises  or any portion
                  thereof occurring prior to Tenant's surrender of the Premises;

         (3)      Claims  arising  out of  failure  to  comply  with  any  Legal
                  Requirement or any requirement of the  Declaration  related to
                  the  Premises  occurring  prior to Tenant's  surrender  of the
                  Premises;

         (4)      Claims arising out of any use, generation, storage or disposal
                  by Tenant  or any  Person  responsible  by,  through  or under
                  Tenant, of hazardous materials,  hazardous  substances,  toxic
                  substances,    or   other   regulated    substances    causing
                  environmental damage or liability;

         (5)      Claims  arising  out  of  or  related  to  Tenant's  indemnity
                  obligations under Article 13 hereof; and

         (6)      Claims  arising  out of  Tenant's  failure to comply  with the
                  provisions of Section 14.3.


                                   ARTICLE 26
                                   ----------

                    EASEMENTS, DEDICATIONS AND OTHER MATTERS
                    ----------------------------------------

         At the  request of  Tenant,  when  Tenant is not in  default  hereunder
(notice thereof having been given and any applicable cure period having expired,
where notice and/or grace is required hereunder), Landlord shall make reasonable
dedications  to public use of roads,  alleys or easements and convey any portion
so dedicated to the  appropriate  governmental  authority,  join in granting any
reasonable  easements  requested  by Tenant for the  Premises,  
                                       47
<PAGE>
and  execute  and  deliver  (in  recordable  form where  appropriate)  all other
instruments  and perform all other acts  reasonably  necessary or appropriate to
the development,  construction,  razing,  redevelopment or reconstruction of the
Premises;  however, Landlord shall not be required to cooperate in any rezoning.
Landlord's  cooperation  and  consent  to any of the  foregoing  shall be within
Landlord's  reasonable  discretion,  to be  given  or  withheld  after  Tenant's
submission  of written  requests and other  information  reasonably  required by
Landlord.  Landlord's cooperation,  consent and actions under this Article shall
be at no cost to Landlord.  Tenant shall save Landlord  harmless from all costs,
expenses,  claims,  loss or damage by reason of, in connection  with, on account
of, growing out of or resulting from any such cooperation, consent or action.


                                   ARTICLE 27
                                   ----------

                     TRADE FIXTURES, MACHINERY AND EQUIPMENT
                     ---------------------------------------

         Landlord  agrees  that  all  trade  fixtures,   machinery,   equipment,
furniture  or other  personal  property  of  whatever  kind and  nature  kept or
installed  on the Premises by Tenant or  Subtenants  may be removed by Tenant or
Subtenants,  or their agents and employees, in their discretion, at any time and
from time to time  during  the Term or upon  expiration  of this  Lease.  Tenant
agrees that in the event of material damage to the Premises due to such removal,
Tenant will repair or restore the same. Upon request of Tenant or any Subtenant,
Landlord  shall  execute  and  deliver any  reasonable  consent or waiver  forms
submitted by any vendors,  lessors,  chattel  mortgagees or holders or owners of
any trade fixtures, machinery,  equipment,  furniture or other personal property
of any kind and  description  kept or installed on the Premises by Tenant or any
Subtenant, setting forth the fact that Landlord waives, in favor of such vendor,
lessor,  chattel mortgagee,  holder or owner, any lien, claim, interest or other
right therein superior to that of such vendor, lessor, chattel mortgagee,  owner
or holder.  Landlord shall further acknowledge that the property covered by such
consent or waiver forms is personal  property and is not to become a part of the
realty no matter how affixed  thereto and that such property may be removed from
the Premises by the vendor,  lessor,  chattel mortgagee,  owner or holder at any
time upon  default by the  Tenant or  Subtenant,  pursuant  to the terms of such
chattel  mortgage or other  similar  documents,  provided that any damage to the
Premises  due to such  material  removal  will be  repaired  or restored by such
vendor, lessor, chattel mortgagee, owner or holder.


                                   ARTICLE 28
                                   ----------

                     LEASEHOLD MORTGAGEE FURTHER ASSURANCES
                     --------------------------------------

         Landlord  and Tenant  shall  cooperate  in  including  in this Lease by
suitable  amendment  from  time to time any  reasonable  provision  which may be
reasonably requested 
                                       48
<PAGE>
by any proposed  Permitted  Mortgagee for the purposes of (i)  implementing  the
mortgagee-protection  provisions  contained in this Lease,  (ii)  allowing  that
Permitted  Mortgagee  reasonable  means to protect or  preserve  the lien of its
Permitted  Mortgage  upon the  occurrence  of a default  under the terms of this
Lease,  and (iii) confirming the elimination of the ability by Tenant to modify,
terminate or waive this Lease or any of its provisions without the prior written
approval of the Permitted  Mortgagee.  Landlord and Tenant each agree to execute
and deliver (and to  acknowledge,  if  necessary,  for  recording  purposes) any
agreement reasonably necessary to effect any such amendment;  provided, however,
that any such amendment  shall not in any way affect the term or rent under this
Lease nor  otherwise in any material  respect  modify the  provisions  hereof or
adversely affect any rights of Landlord under this Lease. Landlord's cooperation
shall be limited to review and comment on any proposed  amendments  and eventual
approval by Landlord of any such amendments  reasonably  acceptable to Landlord.
Any reasonable  costs and expenses  incurred by Landlord in connection  with its
cooperation under this Article 28 shall be reimbursed by Tenant.


                                   ARTICLE 29
                                   ----------

                                  MISCELLANEOUS
                                  -------------

         Section 29.1. Choice of Law. This Lease shall be construed and enforced
in accordance with the laws of the State of Arizona.

         Section 29.2. Memorandum. Landlord and Tenant agree that at the request
of either,  each will  execute a short form  memorandum  of this Lease in a form
satisfactory  for  recording  in the  Office of the  County  Recorder,  Maricopa
County, Arizona.

         Section 29.3. Entire  Agreement.  This Lease together with the Exhibits
hereto contains the entire agreement  between Landlord and Tenant and supersedes
all prior  negotiations  or  agreements.  Any agreement  hereafter  made between
Landlord and Tenant shall be  ineffective  to change,  modify,  waive,  release,
discharge,  terminate  or effect an  abandonment  of this Lease,  in whole or in
part,  unless such  agreement is in writing and signed by the party against whom
enforcement thereof is sought.

         Section 29.4.  Captions.  The captions of Articles and Sections in this
Lease and its Table of  Contents  are  inserted  only as a  convenience  and for
reference and they in no way define,  limit, or describe the scope of this Lease
or the intent of any  provision  thereof.  References  to  Articles  and Section
numbers are to those in this Lease unless otherwise noted.
                                       49
<PAGE>
         Section 29.5. Execution and Delivery. This Lease shall bind Tenant upon
its  execution  thereof.  Landlord  shall be bound  only after it  executes  and
delivers the Lease to Tenant.

         Section  29.6.  Singular and Plural,  Gender.  If two or more  persons,
firms,  corporations,  or other entities  constitute  either the Landlord or the
Tenant,  the word  "Landlord" or the word  "Tenant"  shall be construed as if it
reads  "Landlords" or "Tenants" and the pronouns "it", "he", and "him" appearing
herein shall be construed to be the singular or plural, masculine,  feminine, or
neuter gender as the context in which it is used shall require.

         Section 29.7.  Multiple Parties.  If at any time Landlord,  Tenant, any
Permitted  Mortgagee  (Landlord,  Tenant  or any  such  Mortgagee  being in this
Section  referred  to as a "party") is other than one  individual,  partnership,
firm,  corporation,  or other entity, the act of, or notice, demand, request, or
other communication from or to, or payment or refund from or to, or signature of
any one of the individuals, partnerships, firms, corporations, or other entities
then  constituting such party with respect to such party's estate or interest in
the  Premises  or this  Lease  shall  bind  all of them as if all of them so had
acted,  or so had given or  received  such  notice,  demand,  request,  or other
communication,  or so had given or received  such  payment or refund,  or so had
signed.

         Section  29.8.  Construction.  This Lease has been fully  negotiated by
both  parties  with the  assistance  of legal  counsel  and  shall be  construed
impartially in light of all pertinent facts and  circumstances  and not narrowly
against any party.

         Section  29.9.  Declaration.  Landlord,  as  the  Declarant  under  the
Declaration,  acknowledges  and agrees that Tenant shall be entitled to exercise
all voting rights  applicable  to the Premises  under the  Declaration  and that
Tenant, by leasing the Premises pursuant to this Lease,  shall be considered the
lessee of the Premises for all purposes  under the  Declaration,  including  any
period  of time  during  which  the  Buildings  are  owned by the City of Tempe,
Arizona, pursuant to the City Lease.

         Section  29.10.  Nondisturbance  - Improvement  District.  Prior to the
execution  of this Lease,  and as a condition  precedent to the  obligations  of
Tenant hereunder,  Landlord shall (i) use reasonable  efforts to cause the Tempe
Improvement  District No. 166 to execute,  have  acknowledged  and  delivered to
Tenant a Nondisturbance and Attornment Agreement in a form reasonably acceptable
to Tenant,  pursuant to which the Tempe Improvement District No. 166 agrees that
notwithstanding  any  default by  Landlord  and/or  the Lessor  under the Master
Ground Lease under the terms and  conditions  of the  agreements  and  documents
secured  by a lien  against  the  Premises,  that  so long  as  there  is not in
existence an Event of Default hereunder,  the Tempe Improvement District No. 166
will honor this Lease and not disturb Tenant's rights hereunder, or (ii) provide
other continuing financial assurances or arrangements  insuring that Tenant, its
successors  and assigns,  its  Permitted  
                                       50
<PAGE>
Mortgagees, future purchasers of the Premises and the Premises shall not be held
financially  responsible for the lien imposed by Tempe Improvement  District No.
166 or, if reasonably  commercially available at a reasonable cost, Lessor under
the Master Ground Lease or Landlord shall obtain title insurance  endorsement(s)
insuring Tenant, its successors and assigns, its Permitted Mortgagees and future
purchasers  of the Premises  against  loss as a result of the  existence of said
lien. If Landlord is unable to deliver the financial  assurances or arrangements
for  such  title   insurance   endorsement(s)   or  is  unable  to  obtain  said
Nondisturbance  and  Attornment  Agreement,  Tenant may either (i) waive  strict
conformance with this Section 29.10 and execute this Lease,  whereupon the other
provisions  of the Lease  shall have full force and  effect,  or (ii)  refuse to
execute  this  Lease,  whereupon  this  Lease  shall have no force or effect and
neither Landlord nor Tenant shall have any liability one to the other.


                                   ARTICLE 30
                                   ----------

                                    INUREMENT
                                    ---------

         Section 30.1.  Covenants  Bind and Inure.  The covenants and agreements
herein  contained shall bind and inure to the benefit of Landlord and Tenant and
their respective heirs, legal representatives, successors and assigns, except as
otherwise provided herein.
                                       51
<PAGE>
                                   ARTICLE 31
                                   ----------

                                 ATTORNEYS' FEES
                                 ---------------

         Section 31.1.  Prevailing Party to Recover Attorneys' Fees.
In the event of any suit,  arbitration,  or other adversarial proceeding between
the  parties  in any  court  or  other  forum  of  competent  jurisdiction,  the
prevailing party shall be entitled,  in addition to any other remedy, to recover
its reasonable attorneys' fees and costs of such proceeding.

         The parties have caused this instrument to be duly executed the day and
year first above written.

         LANDLORD:

PAPAGO PARK CENTER, INC.,
An Arizona corporation


By /s/ John R. Lassen
   ----------------------------
  Its President
      -------------------------


           TENANT:

THREE-FIVE SYSTEMS, INC., a
Delaware corporation



By David R. Buchanan
   ----------------------------
  Its President
      -------------------------
                                       52
<PAGE>
STATE OF ARIZONA                    )
                                    )ss.
County of Maricopa         )

         On this, the 1st day of April,  1994, before me, the undersigned Notary
Public,  personally appeared John R. Lassen, who acknowledged  himself to be the
President of PAPAGO PARK CENTER,  INC.,  an Arizona  corporation,  whose name is
subscribed to the foregoing  instrument,  and acknowledged  that he executed the
same for the purposes therein contained in such capacity.

         IN WITNESS WHEREOF, I have hereunto set my hand and official seal.


                                            /s/ Terril A. Lonon
                                            -------------------------------
                                            Notary Public

My Commission Expires:                             OFFICIAL SEAL
April 29, 1995                                   TERRILL A. LONON
----------------------                    Notary Public - State of Arizona
                                                  MARICOPA COUNTY
STATE OF ARIZONA                    )      My Comm. Expires April 29, 1995
                                    )ss.
County of Maricopa         )

         On this, the 1st day of April,  1994, before me, the undersigned Notary
Public,  personally appeared David R. Buchanan,  who acknowledged  himself to be
the President of THREE-FIVE SYSTEMS, INC., a Delaware corporation, whose name is
subscribed to the foregoing  instrument,  and acknowledged  that he executed the
same for the purposes therein contained in such capacity.

         IN WITNESS WHEREOF, I have hereunto set my hand and official seal.


                                            /s/ Jeanne A. Gargus
                                            -------------------------------
                                            Notary Public

My Commission Expires:

December 12, 1995
----------------------
                                       53